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2022 | Book

Housing Market Response to Sea-Level Rise in Florida

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About this book

South Florida continues to attract new residents despite its susceptibility to sea-level rise. This book explores the views of real estate agent with respect to how prospective homebuyers assess the risk of flooding. It reports on their observations as to whether house prices are stagnant or falling in coastal areas vulnerable to flooding, and their conclusions after working with prospective homebuyers as to whether coastal south Florida is a good place to find a home or, alternatively, a risky investment in a place that will eventually be submerged by rising seas.

The book reports on a 2020 survey of real estate agents and concludes that it is not clear that the housing market has integrated flood risk either into reduced demand for housing or in reduced prices for houses susceptible to flooding. These conclusions have important implications for understanding how the risks of climate change and sea-level rise are reflected in the housing market both now and in the near-term future.

Table of Contents

Frontmatter
Chapter 1. Introduction
Abstract
Despite its vulnerability to flooding associated with sea-level rise, coastal South Florida continues to attract large numbers of new residents each day. Information about flood insurance requirements and flood-risk is widely available, but our 2018 survey found that coastal residents seemed relatively unconcerned about the future value of their homes. At the same time, some econometric studies have found that proximity to the coast may have a negative impact on both demand and sales price of coastal housing. Clearly, the south Florida coast is both an amenity and increasingly a hazard. Two other factors potentially impacted the market as of 2020. First, as of the summer of 2020, detailed, property-level information was made available about flood risk to prospective homebuyers on the website of the National Association of Realtors®. Second, the price and availability of flood insurance came into greater focus as there was serious discussion of revising the price structure of federal flood insurance for properties at substantial risk. To gain a perspective on the impacts of increased attention to the hazard of sea-level rise on the residential property market, we administered a survey in the fall of 2020 to 680 licensed Florida estate brokers and sales associates. We asked the real estate agents to describe what they observed in working with prospective south Florida homebuyers, and their assessment of local housing market trends. The analysis of their views has important implications for understanding how the risks of climate change and sea-level rise are reflected in the housing market both now and in the near-term future.
Risa Palm, Toby Bolsen
Chapter 2. The Development of Vulnerable Real Estate in South Florida
Abstract
Coastal Florida continues to attract large numbers of homebuyers from other parts of the country and from other parts of the world, particularly Latin America. The contemporary Florida landscape is the result of numerous decisions about housing development, zoning and building standards made decades ago. These decisions were made with little regard for long-term environmental sustainability or notions that global climate change would make the coast more vulnerable to flooding. A 2018 survey of south Florida residents by the authors showed that most current residents anticipate little or no impact of sea-level rise on the values of their own homes. Other studies of house price trends have detected a dampening effect of vulnerability to sea-level rise on home sales. We concluded that we needed another perspective on this issue, and therefore conducted a survey of real estate agents.
Risa Palm, Toby Bolsen
Chapter 3. House Price Trends in Coastal US Cities
Abstract
Coastal location is both an amenity adding to the value of a property, and at the same time a hazard detracting from its value. Several recent studies of house price trends in flood-prone coastal portions of the United States in general, or Florida specifically, have yielded different conclusions: some have identified a price discount for coastal property that is attributed to the vulnerability to sea-level rise while others have found no such effect. Flood insurance, which has become increasingly costly in the last decade, is mandatory for homebuyers seeking mortgage financing for properties in the areas designated by FEMA of having at least a 1% annual chance of flooding. This addition to the cost of homeownership could increase prices and reduce demand for properties in these locations.
Risa Palm, Toby Bolsen
Chapter 4. Effective Communication About Climate Change and Sea-Level Rise
Abstract
In the United States, people are deeply divided over the issue of climate change. Ideological and partisan divisions have been found to have a major influence on the way homebuyers evaluate flood risks to their homes and their neighborhoods. The survey reported in this book focused on the views of real estate agents, and their understanding of the way in which prospective homebuyers perceive flood risk related to sea-level rise. To put these responses into context, this chapter synthesizes some of the social science research about factors that affect risk perception, as well as the effectiveness of communication strategies that use salient, local and visual imagery.
Risa Palm, Toby Bolsen
Chapter 5. The Role of the Real Estate Agent
Abstract
Requirements for licensure as a real estate agent have become increasingly demanding over the past decades, involving the acquisition of knowledge and skills that make real estate agents invaluable to both home sellers and homebuyers. The National Association of Realtors® has set a stringent code of ethics for its members. In addition, Florida statutes require the disclosure of “all known facts that materially affect the value of residential property and are not readily observable.” Empirical research has demonstrated the important influence that real estate agents have on buyers, and therefore an assessment of their evaluation of trends in the property market are crucial for an understanding of current practice and trends.
Risa Palm, Toby Bolsen
Chapter 6. Methodology: Survey of South Florida Realtors
Abstract
The authors collected survey responses from 680 licensed real estate agents in south Florida in the fall of 2020. Compared with national statistics, the Florida respondents were more likely to be male, have completed higher levels of education, were older, and had more years of experience in real estate. Politically, most identified themselves as Independents, and higher percentages of Gulf Coast real estate agents said they were Republicans. Almost all of them believe that the sea-level is rising, that climate change is occurring, and that sea-level rise is a product of climate change.
Risa Palm, Toby Bolsen
Chapter 7. Information About Sea-Level Rise and Its Effects on Home Search Behavior
Abstract
A great deal of information about property elevation and potential flood risk is available to homebuyers. Most Florida homebuyers are moving from another Florida residence, and therefore are at least somewhat familiar with both storms and tidal flooding. Flood insurance requirements also are a source of information about flood risk. Part of the flood insurance purchase process requires the home buyer to acquire a certificate of elevation that indicates the point at which wave action, tidal action or storm surge will flood the first floor of the house. In 2020, the National Association of Realtors® added two more indicators of flood risk to their realtor.​com listings: information about the FEMA insurance classification of the property as well as maps and text from Flood Factor presenting a numerical score representing the flood risk factor of the property on a scale from 1 to 10. At the time of our survey, two to three months after this change, Realtors® reported little response to this additional information from either buyers or sellers. The respondents to the survey indicated that some homebuyers are avoiding low-lying property susceptible to flooding, but most real estate agents stated that it is not the flood risk itself but instead the cost of flood insurance that drives buyer response to coastal property.
Risa Palm, Toby Bolsen
Chapter 8. The Housing Market in Coastal South Florida from the Perspective of the Real Estate Agent
Abstract
The survey of real estate agents was intended to provide a perspective from informed professionals on the status and the trajectory of the housing market in coastal south Florida. When asked whether they believed that house prices were relatively stagnant or falling in low-elevation coastal areas subject to flood risks, most responded either rarely or not at all. They also generally have seen little or no evidence that either lenders or appraisers are taking vulnerability to sea-level rise into account when making decisions about home mortgage loans. Most of the real estate agents also foresee little impact of coastal flooding on demand or prices for such properties in the 5–10-year future.
Risa Palm, Toby Bolsen
Chapter 9. Four Communities: Vulnerable by Design
Abstract
Many coastal Florida real estate developments were created by draining wetlands, dredging the land to create canals, and using the dredged sediments to create homesites at elevations only slightly above sea-level. Some of the original developers had idealistic intentions of creating garden communities, but most were trying to maximize profits by creating as much waterfront property as possible. Current residents of these communities are now living in areas susceptible to a combination of subsidence and sea-level rise. This chapter reviews the origins of four such communities: Apollo Beach, Cape Coral and Punta Gorda, on the Gulf Coast, and Hollywood on the Atlantic Coast. Each is highly vulnerable to flooding primarily because of the way the land was created and platted and each is therefore “vulnerable by design.”
Risa Palm, Toby Bolsen
Chapter 10. Implications of Housing Market Response to Sea-Level Rise in South Florida
Abstract
Several influential studies have suggested that house prices in coastal Florida, in areas prone to flooding associated with sea-level rise, have been stagnating or falling in comparison with price trajectories of less vulnerable locations. However, when surveyed in the late months of 2020, real estate agents reported that they have not noticed any weakening in demand for coastal properties, see no evidence of price effects from buyers, appraisers or mortgage lenders, have generally optimistic views about the future of the housing market, and expect houses even in vulnerable areas to continue selling briskly. Numerous adaptations to sea-level rise are possible, but all of them are costly and will take commitment from government entities and the general public. What remains unresolved is the issue of who should pay for these adaptations and how much will the costs of occupancy of vulnerable areas continue to be shouldered by local, state, and federal taxpayers. These are important questions not only for Florida or other coastal states, but also for the entire nation.
Risa Palm, Toby Bolsen
Backmatter
Metadata
Title
Housing Market Response to Sea-Level Rise in Florida
Authors
Prof. Risa Palm
Prof. Toby Bolsen
Copyright Year
2022
Electronic ISBN
978-3-030-88435-2
Print ISBN
978-3-030-88434-5
DOI
https://doi.org/10.1007/978-3-030-88435-2