Coastal homes, once prized, now losing cache among buyers amid flood concerns
Housing price appreciation in flood zones is less than those farther inland, analysis shows
Growing concern over flooding and climate change are making once highly sought-after coastal homes nationwide less attractive to buyers.
An analysis of pricing in coastal areas around the country by Realtor.com and the Wall Street Journal found that homes with high flooding risks have appreciated slower than homes farther inland.
The analysis tracked homes over the last few years, and found the slowing prices was greater along the Eastern seaboard, in states like Florida, North Carolina and New Jersey, where hurricanes have caused hundreds of billions of dollars in damage. The study looked at 1.2 million homes nationwide. Homes in the Hamptons on Long Island are also at risk of losing their value, given they will face chronic flooding over the coming years, according to a separate recent report.
In Monroe County, Florida, which includes the Keys, home prices in high-risk zones rose 32 percent between 2012 and 2017, while those in low-risk zones shot up 83 percent. It was a similar story in the Panhandle’s Gulf County.
In Ocean County, New Jersey, at-risk homes appreciated just 1 percent over that period, compared to a 26 percent rise in prices of homes farther inland.
The most analysis adds to several recent reports in Miami that sea level rise was to have an effect on home prices.
But there are other factors at play that may explain slowing home prices in those at-risk areas. Some wealthy coastal homeowners have left for parts of the country with lower taxes, the Journal reported. Some brokers say that appreciation on a percentage basis isn’t as strong for the coastal homes because they are already priced higher than those farther inland.
Between 2012 and 2017, prices of homes in high-risk flood zones failed to keep up with those that weren’t at risk in 40 of 66 counties analyzed. The premium for waterfront properties shrank from the two-decade average of 41 percent to 36 percent nationwide in April 2018.
Insurance premiums are higher for at-risk homes as well — a $250,000 plan with the National Flood Insurance Program for a primary residence cost an estimated $2,199 compared to $1,559 for the same plan covering a home in a low-risk area.
Javier Vivas, senior analyst at Realtor.com, said buyers are more aware of the risks of owning a coastal home given the recent string of strong hurricanes.
“Because of that awareness they are more skeptical or at least more knowledgeable about this real, tangible risk,” he said. [WSJ] — Dennis Lynch