Is Your Mortgage Under Water? No, I mean Really – Under Water.
December 8, 2016
As my new video on Florida Sea Level rise (see below) shows, this is happening.
I hate to say it, but clearly at this point, the only thing that will get the attention of the climate denial crowd will be a disastrous crash in the coastal housing bubble, which may already be underway. My visit in Miami showed me clearly the degree to which South Florida, and many, many, Americans, are deeply in denial about what is happening right in their front yards. I’m sorry that so many are going to suffer, but wake-up calls are often painful.
It’s a trillion-dollar bubble.
Once again, this raises a key question for all Americans: What year will coastal property values crash?
I first posed the question in 2009, pointing out that coastal property values will crash long before sea levels have actually risen a few feet. Instead, coastal property values will crash when a large fraction of the financial community, mortgage bankers and opinion-makers — along with a smaller but substantial fraction of the public — realize that it is too late for us to stop catastrophic sea level rise.
When sellers outnumber buyers, and banks become reluctant to write 30-year mortgages for doomed property and insurance rates soar, then the coastal property bubble will slow, peak, and crash.
This appears to be underway. As the Times reports, “Nationally, median home prices in areas at high risk for flooding are still 4.4 percent below what they were 10 years ago, while home prices in low-risk areas are up 29.7 percent over the same period, according to the housing data.” Since 2001, “home sales in flood-prone areas grew about 25 percent less quickly than in counties that do not typically flood.”
South Miami mayor Philip Stoddard warns that “coastal mortgages are growing into as big a bubble as the housing market of 2007.” But, he notes, when this bubble crashes it will never recover. Indeed, property values will keep declining since the waters will keep rising and the storm surges will only get worse.