Coastal real estate seriously threatened by climate change
Rising sea levels and major weather events caused by climate change are expected to increasingly threaten coastal real estate properties around the world, including in Hawaii. There is, however, growing evidence that U.S. homebuyers are taking the real estate impacts of climate change more seriously, according to a new one. University of Hawaii Economic research organization (UHERO) blog written by Justin tyndall, UHERO assistant professor and assistant professor of economics.
Tyndall used a comprehensive repeat sales data set of homes in Long Island, New York, to estimate the decline in price appreciation caused by the threat of sea level rise. Between 2000 and 2017, Tyndall reported found that properties between 0 and 2 meters from current sea level had an annual appreciation 1.3 percentage points lower than the overall market.
The research also revealed the changing demand in the coastal real estate market. Tyndall found that homes near the coast, but at a higher elevation, outperformed the market as a whole, gaining 0.8 percentage points above the annual appreciating average. Tyndall said homebuyers interested in coastal real estate have shifted their demand from high-risk properties to low-risk properties, pushing up the price of low-risk coastal homes.
“As the consequences of climate change become more certain and less distant in the future, the impact on real estate markets will accelerate,” Tyndall said. “A significant part of the properties in Hawaii are exposed to sea level rise and coastal erosion. A steady decline in the value of high-risk real estate helps mitigate the risk of sudden and catastrophic losses for coastal landowners. Nonetheless, the future consequences of climate change represent a huge financial loss for real estate markets and a shift in the way coastal property is developed and managed.
UHERO is housed in EUH by Manoa College of Social Sciences.
This work is an example of EUH Mānoa’s goal of Research Excellence: Advancing the Business of Research and Creative Work (PDF), one of the four objectives identified in the Strategic plan 2015–25 (PDF), updated in December 2020.