Suffering from rising sea levels, some North Carolina homes are literally underwater. Still, the overall waterfront property market is anything but, with price gains far exceeding inland rates even as climate risks threaten to wipe out coastal homes.
Last week, a $650,000 beachfront home in North Carolina’s Outer Banks collapsed—the sixth such incident in the region in the past four years. That’s putting a new focus on the climate threats coastal properties are already facing, while the housing market apparently looks the other way.
Research shows that up to 13 million Americans’ homes could be affected by rising sea levels by 2100. But at least for now, waterfront views are having a bigger impact on property values.
In fact, U.S. Coastal properties have appreciated faster than those in inland zones, and they’re also being bought up by higher-income owners, according to a paper published this March in the scientific journal Nature Communications.
“Consumers are clearly mindful that…climate change impacts could be within the window of a 30-year mortgage, but their current behavior still implies that to have a view of the ocean is more desirable,” Lawrence Yun, chief economist at the National Association of Realtors, told the paper’s authors.
North Carolina’s Outer Banks, a series of low-lying barrier islands heavily exposed to Atlantic storms, are especially vulnerable to rising sea levels and coastal erosion: Some areas have recorded sea level rises of up to seven inches over just the past few years. Following last week’s house collapse, local authorities shut down a stretch of road and are urging visitors to remain cautious.
North Carolina is far from the only region to already be seeing the effects that climate change can have on coastal areas, which have also experienced more severe storms and heavier rainfall that further erode shorelines.
For example, Salisbury, Mass., homeowners spent half a million dollars trucking in sand to protect their properties from coastal storms earlier this spring. And a $16 million mansion in Dana Point, Calif., is on the verge of collapsing into the Pacific.
Average sea levels on the American coastline are expected to rise exponentially over the coming decades, putting the 40% of the population that lives in coastal zones under greater flooding threat.
The rising threat of coastal flooding and erosion has sent insurance companies fleeing inland. In Florida, whose highest point is just 345 feet above sea level,multiple major insurers have pulled out of the state, sending consumers’ premiums soaring.
Despite that, Florida home values have soared since the pandemic, with the average home in the southern part of the state 35% overvalued.
“It’s not a matter of if, but when coastal communities approach complete inundation,” said Duke University economics professor Martin Smith, who cowrote a paper proposing a model for coastal property values. “The question is: Are there more effective ways to manage coastal areas in the next few decades that could smooth this transition?”