How much longer does southern Florida have until real-estate values in the region collapse on the back of flagging demand? At some point the reality that the region is not long for this world will have to sink in, and when it does, demand for homes in the region will crater to a degree that not many living there now probably fully comprehend … so, when will that be?
Possibly not all that long from now — if an interesting article that Bloomberg recently published is to be believed. That article noted that events such as Hurricane Irma are slated to make it abundantly clear to all of those who aren’t senile that South Florida is in an incredibly vulnerable position with regard to sea level rise and climate change.
For example, a situation detailed in the article involves someone who sold their house in Coral Gables because of worries about sea level rise and then bought a condo on Biscayne Bay situated on top of the highest ridges in the area…which subsequently was damaged via the penetration of storm water through “stormproof” windows during Hurricane Irma.
A third of the units in the condo building were damaged, the generator was ruined, the elevator was damaged, and flooding surrounded the building. Months later there are apparently still ruined, rotting boats lingering on the land nearby. Even though the owner in question’s condo wasn’t damaged, he’s still dealing with a $60,000 bill from the condo association relating to the repair of the building (that figure relates to the share of damages that the owner’s insurance isn’t covering, the total bill is much higher).
Unsurprisingly, the owner is now looking to sell the condo and get the hell out of Florida entirely. How much longer until enough others do so as well that the pretense that real estate investment in Florida isn’t suicidal is dropped?
The piece from Bloomberg provides more: “It’s too soon to know how Irma affected the market, says Aaron Terrazas, a senior economist at Zillow. But there’s anecdotal evidence that it’s taking a toll on property values: A company that assesses flood risks is booming, and workshops for municipal leaders to deal with the impact are drawing sold-out crowds.
“One of those people is Albert Slap, who would rather not be profiting from other people’s misfortune. But his business, determining the flood risk facing specific homes around South Florida, has never been better. And he thanks Irma…What’s good for Slap isn’t necessarily good for the region’s property values. His customers include insurance companies worried that federal flood maps underestimate risk, as well as potential homebuyers trying to find out if they’re about to buy a house that will be regularly inundated by South Florida’s increasingly troublesome tidal flooding.
“The region’s frothy home values, Slap said, have persisted because of what he calls ‘a dirty little secret’ among real estate agents, who are aware of the flood risks but face no requirement to disclose them to buyers.
“Slap said the increase in his business shows that buyers are starting to become more aware of the problem — and as that happens, housing values will fall. And he said it’s only a matter of time before real estate agents are required by law to reveal those flood risks, noting that the US House of Representatives passed a bill to that effect in 2017. The Senate has yet to take it up. The alternative is a housing market kept afloat by ‘systemic fraudulent nondisclosure,’ Slap said. ‘Which is pretty much what we have now.'”
So, how much longer until the real estate market in southern Florida mostly collapses? Will such an event have to wait for another hurricane (one that hits directly and at full strength this time)? Will it have to wait for the start of another recession?
Or will the situation simply slowly unfold over time?
As it stands the endless construction work being undertaken to “prepare” some wealthy regions for sea level rise (new drainage, higher roads, etc.) seems to be having an impact — who wants to spend years living near construction work? Will that be part of the reason for an eventual collapse in real estate value (the unsettled nature of the infrastructure there)?
Who can say exactly? But don’t be too surprised if there’s an exodus out of the state within just the next 1–2 decades. Well, an exodus of those who can afford to leave, that is…