Beachfront homes are losing value due to climate change

While the southeastern United States was still recovering from the destruction wrought by Helen, Milton unleashed his fury on the coasts of Florida. This is nothing new for the inhabitants of this corner of the planet, but climate change is working against them, raising the temperature of the oceans and their water levels.

This unstoppable and quiet advance is causing the value of luxury homes and mansions along the coast to plummet.

Climate change is eroding coastlines. Study’First National Flood Risk Assessment» from First Street offers a new reclassification of the value of waterfront properties, reducing them by 5-10% from their current value. The forecast model justifies this reduction as 14.6 million coastal properties face a probable risk of flooding, and this risk will increase by 10% over the next 30 years.

These coastal locations are usually occupied by expensive houses precisely because of their proximity to the sea. Perhaps this is your main enemy. Considering the appearance of the first consequences of the greenhouse effect on the coasts, this value has already begun to fall.

A mansion on the front line is no longer a good idea. As stated in the article CNBCRising sea levels due to global warming have reduced the value of luxury mansions located near beaches due to the growing risk of storms, which, as has already happened in Dana Point, California, destroy homes located on the beach. line

Local newspaper Nantucket Current compiles evidence of a purchase transaction on Nantucket Island, off the coast of Boston, in which a $2.3 million waterfront home was finally sold for $600,000 due to apparent sea encroachment. “The house is incredible. The location is incredible. And the price greatly reduces the risk. I’d like to think it will last a long time, but I’m definitely aware of the risk that any storm could cause problems for me in the future,” his buyer said.

This is also obvious in Spain.. You don’t have to go to a hurricane-prone coast to see the effects of climate change on the coasts. During Storm Nelson in March last year, beaches along the Catalan coast were severely damaged, destroying sandbanks and causing extensive damage. This phenomenon is becoming more and more common.

The General Coastal Ordinance stipulates that a certain distance must be maintained when building in front of the coast, and this can prevent the devaluation of new developments. However, the value of already built facilities may fall due to deteriorating coastal conditions and the risk of flooding.

Increased damage from climate disasters. In addition to flooding and coastal degradation, climate disasters such as hurricanes and wildfires are severely impacting homes in some of the areas with the highest influx of millionaires, such as Florida and California.

The rise in natural disasters is causing insurance premiums to skyrocket, and some U.S. insurers are outright shutting down operations in areas affected by hurricanes or prone to severe fires. Mark Friedlander, director of corporate communications at the Insurance Information Institute, told the news portal. newsweek, “Florida homeowners already pay the highest insurance premiums in the country. Homeowners in the state paid an average annual premium of $11,163 as of July 2024, compared to the U.S. average of $2,435 per year.”

This means that homes located on the seashore or in areas at high risk of natural disasters (major fires, etc.) will not only lose their value, but will also increase their annual costs due to rising insurance premiums.

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Image | Unsplash (Cindy Suesenguth)