There’s been a lot of news recently about the dire effects climate change can have on Miami, yet not only has the risk not been priced into real estate but values are rising. What’s up? Are climate change deniers that rich, or is something else going on? Is the risk seen as so far out as to be discounted to zero?
It’s flat here, there’s a lot of coastline, and a sea level rise of only a few feet would turn Coral Gables into New Venice. Even a foot and a half — which apparently has a decent change of happening in the next decade or three — would be very bad for Miami Beach, and also for much of South Florida in that it could impact water supplies and swamp power plants.
How then to explain why none of this is priced into the real estate market? Not only are house prices mostly going up after perhaps over-reacting to the the foreclosure crisis, but so too are waterfront land prices, as evidenced by this $100 million/acre sale of the last piece of undeveloped waterfront in downtown (total price for 1.25 acres was $125 million).
Yes, it could be a bubble. Yes, it could be the musical chairs phenomenon where the buyer thinks they can flip it, or develop it, before the music stops. Or it could be that the buyers watch too much Fox News, or have their own climate scientists.
I’d really like to know what’s going on here — if only because I (co)own a house. Any ideas?