A New York Times story published this week reports that the economic impact of climate change and rising sea levels on coastal real estate “could surpass that of the bursting dot-com and real estate bubbles of 2000 and 2008.”
It’s an important story with plenty of implications for Hawaii, but likely got lost in the Thanksgiving and Black Friday news and advertising.
See: Ian Urbina, “Perils of Climate Change Could Swamp Coastal Real Estate.”
“The fallout would be felt by property owners, developers, real estate lenders and the financial institutions that bundle and resell mortgages,” according to the story.
The article cites “nuisance flooding,” or flooding caused by tides rather than by weather, as sort of a leading indicator. Honolulu already has its share. The high tide floods in the Mapunapuna industrial area is just the most recognized. But some older high rise buildings in low lying areas of Honolulu, including in and around Waikiki, are already facing problems created by a rising water table. I know of several condominiums on the edge of Waikiki where water is entering elevator shafts, requiring expensive efforts to seal or block the waters. Given the number of older buildings, I would be surprised if this isn’t a major issue that just hasn’t grabbed the public’s attention yet.
There are many unknowns, including the pace of sea level rise over coming decades and the reaction of real estate markets.
The NYT story cites a recent post by Freddie Mac, the mortgage giant, concerning the impact on the mortgage market.
One challenge for housing economists is predicting the time path of house prices in areas likely to be impacted by climate change. Consider an expensive beachfront house that is highly likely to be submerged eventually, although “eventually” is difficult to pin down and may be a long way off. Will the value of the house decline gradually as the expected life of the house becomes shorter? Or, alternatively, will the value of the house—and all the houses around it—plunge the first time a lender refuses to make a mortgage on a nearby house or an insurer refuses to issue a homeowner’s policy? Or will the trigger be one or two homeowners who decide to sell defensively?
I’m now living a quarter-mile from the beach, and I’m old enough that the long view isn’t as much of a personal concern. But for younger folks, this all deserves to be a much higher priority.