As sea levels rise and storms intensify, coastal real estate is seeing flooding and erosion like never before. From Dana Point, California, to Long Island, New York and Nantucket, Massachusetts, some of the nation’s priciest coastal real estate is in an increasingly precarious position due to climate change.
This year’s hurricane season is already underway, and the forecast is for “above-normal” activity, according to the National Oceanic and Atmospheric Administration (NOAA). It predicts up to 13 hurricanes, with 4-7 categorized as “major” storms.
Various risk models have shown myriad projections for falling real estate values, but the effects of climate change are already hitting the market — and at a faster pace than most expected.
A Nantucket home listed last summer for just over $2 million sold early this year for just $600,000. A barely remarkable Nor’easter in the fall wiped away an astounding 70 feet of the beach it sits on, thanks to sea level rise and unusually intense rainfall.
The buyer told the Boston Globe, “the price mitigates the risk to a good degree.”
And it’s not the only one.
“There have been several,” said Shelly Lockwood, a real estate agent on Nantucket. “One sold in the mid 7s, and one sold in the mid 8s, which I know that sounds like a lot of money, but those houses, if they weren’t at erosion risk, would have sold for, I don’t know, 10 or 12 million [dollars].”
Lockwood just launched a seminar for fellow agents to help them re-price homes at risk.
“I think we owe it is a duty to our clients to tell them what the risks are, and I was getting frustrated that that wasn’t being communicated to my satisfaction, because I saw houses selling and I thought that’s not worth that, it’s falling in the ocean,” said Lockwood.
Montauk Mess
On the eastern end of Long Island, New York, in Montauk, a series of storms this winter had the community scrambling to bolster its beaches and protect its multimillion-dollar homes. The water was coming in faster than ever before.
“Where we’ve seen flooding in the past and the water subsiding right away, it’s not subsiding anymore,” said Kay Tyler, executive director of Concerned Citizens of Montauk. “We have a friend that has a $10 million home, and he’s not even sure what to do with it because if he sells it it’s never going to be the $10 million he bought it for.”
Looking at zip codes just on the East and Gulf Coasts of the United States, 33 have a median home value of at least $1 million. In just these areas a combined 77,005 properties are at significant flood risk according to models by First Street, a climate risk data and analytics firm. That is roughly $100 billion in potential losses.
Property tax relief?
Attorney Chris Farley is working with Nantucket homeowners to help reduce their property taxes, as both the beach and their home values erode. Some homes have been reassessed while their neighbors haven’t.
“I think we just put our heads in the sand,” said Farley. “Values weren’t going down until the last 10 years and it’s still been kind of quiet reduction.
Farley pointed to one property, which he said had an assessment of $2.2 million. It has not been assessed recently, but two others on the same street and seaside cliff have been reassessed —one for $500,000 and one for $250,000. The cliff is eroding badly.
“I would say 12-15 feet of sand is gone,” Farley estimated, pointing to huge exposed geo tubes underneath the cliff. They should be covered in sand.
“They used to be able to walk down these steps right out and there was another stairway, it’s gone. So they have no more access. To me that affects the value of the property when you can’t even use the waterfront that you bought to be on,” referring to the home that has yet to be reassessed.
Buried in sand
On another Nantucket beach, the rising ocean has pushed sand so far that it’s burying homes. Sand covered two homes up to the windows and uncovered the septic system and utility wires. Once those are exposed, the town has to condemn the property, according to Lockwood.
“This was not like this last fall. This has happened this quickly,” she said.
Homeowner John Conforti lives just next to those two homes. Sand has risen so far it now covers his entire front yard. His deck, which used to have a stairway down to the yard, is now even with the sand. He has owned his home for 42 years and already moved it back from the beach once.
“We all say one more year,” said Conforti. “It’s unbelievable what’s happened.
Lockwood estimates that without the new risks to the home from climate change, Conforti’s home would be worth about $2.5 million.
“I don’t know if you could sell it. Maybe five, maybe $500,000? Maybe. But you’d have to have some buyer willing to lose it,” she added.
As more and more homes lose value and see their property taxes reduced, the local economy could take a hit, meaning taxes for everyone could increase to make up the shortfall.
Nantucket residents are also voting on which parts of the island need the most help — and who will pay for it. Meanwhile, in Montauk, experts are reassessing coastal resilience plans made nearly a decade ago after Superstorm Sandy, because they’re already outdated due to climate change.
— CNBC producers Erica Posse and Dardan Pula contributed to this piece.