- According to a study by Harvard, the effects of climate change are having an impact on the market value of both inland and coastal homes, which lead to the term “climate gentrification”.
- Additionally, Harvard reported that homes at a higher elevation are basically considered more valuable now, and will continue to increase in the future.
- The National Oceanic and Atmospheric Administration, climate research groups, and Universities have made negative predictions for the rise in Miami’s sea-level.
Imagine sitting on the edge of the water in Miami Beach in a modern-styled glass home with perfect views of the ocean and a soaking tub in the ground-level master suite. This property is listed for $23.5 million.
Elsewhere an inland property situated on Little Haiti which has issues with garbage and the owner may have the unpleasant sight of seeing a dead animal on the street. This property has a list price of $549,000. However, there is plenty of real estate expects that say this would be a more worthwhile investment compared to the $23.5 million mansion.
While the mansion is a desirable property and exquisitely appointed, there is the risk of aggressive storms and rising tides that can start to lower its market value. However, the more cost-effective properties in Little Haiti are well placed to avoid the risk of flooding and its market price continues to grow at rapid pace.
A reason for this is related to climate gentrification which is indicated the land at a higher elevation is becoming more valuable.
Studies suggest that homes at a higher elevation are continuing to see growth in value and will see a better rise in the future.
In these high elevation areas, the general population and real estate investment will witness faster growth than other areas.
On average, the properties located along the Miami coastline are seeing a decline in value of 10% due to issues like climate change.
The National Oceanic and Atmospheric Administration, climate research groups and universities have all expressed their opinion that Miami will see dire increases in the local sea-level. Many believe the ocean will start to rise above many of the coastal properties. Today, there is already the risk of nuisance flooding that is common in certain areas along the coast.
It is this reason that the wealthy investor is looking to move to the high elevation neighborhoods which leads to displacing the residents on a low income.
For the existing residents of the high elevation properties, there are real estate investors and others that are attempting to educate on the rise of their property value.
The local community typically only sees new people entering the area who start buying up many of the homes. This leads to an increase in property taxes and property values. Over time this will lead to pricing out the original community.
Any homes that are foreclosed are likely to be purchased by an investor who will simply have the property renovated and then sold on to a further investor.
The smart developer and investor will quickly notice what is taking place and buy up the available properties. Within a period of one or two years, this can result in a significant and rapid change in the community.
In addition to the homes on the street, this gentrification also leads to a change in the local stores which can include the trendy and sleek coffee stores which start to push out the ethnic stores.
Many of these areas have long-term tenants that have been living happily for 10-15 years, but now the developers and investors are less interested in the monthly rent and more concerned with redeveloping the properties for the higher-end market.
More and more Millennials are starting to set up home in urban centers that include the more ethnic and less expensive neighborhoods. Also, the investors still look for the areas in demand, but pay closer attention to parts of Miami that are at risk of water. This has resulted in more build projects in high elevation areas at a much faster pace.
However, there are a variety of factors will go into the buyer decision that go beyond the elevation and the risk of water.
Also, it is worth considering that many of the studies don’t talk much about flood mitigation, and the fact the coastal homes can help to give the waterfront protection in the event of flood disasters in the future.
Developers are now starting to look at homes along the waterfront and trying to decide the best options to fortify the properties.
Miami City is investing in the region of $200 million in upgrading its infrastructure, installing pump stations and into resilience.
Additionally, Miami Beach is likely to invest significantly more to raise seawalls and sidewalks. Much of the money is sourced from new bonds, which is essentially votes paying more property tax in an effort to safeguard their homes.
Other options include building new homes in the less dense and vulnerable areas throughout the city.
Investors still believe there are plenty of opportunities to build in both areas: inland and on the water.
Even though the market value of homes is seeing a rise inland, there is still enough demand on the waterfront.
Many buyers are putting a lot of focus on the modern, new construction which is built to the latest code, and mostly at high elevation. However, there are still those that want to live on the coast with the stunning views and boat out front.
According to the University of Pennsylvania and the University of Colorado, a further study indicates that the risk of a rise in the sea level across the country means that waterfront properties have seen a 7% decline compare to homes further inland.
This decline in market value has appeared over a period of time and further influenced by the sophisticated investors and buyers who are concerned with global warming.