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Tuesday, March 11, 2014

Sea Level Rise Predictions Have Little Effect On Florida Real Estate

Road under water in South Florida (Kenny Malone/WLRN)

(Kenny Malone/WLRN)

Sea level rise is one of the most pronounced effects of climate change. The latest projection from the United Nation’s Intergovernmental Panel on Climate Change has seas levels rising anywhere from 0.8 to 3.2 feet by the end of the century. That can mean big changes for coastal communities.

This week we are running a series of reports looking at the impact of rising seas on South Florida. Today: How the real estate market is reacting. From the Here & Now Contributors Network, Karen Rundlet of WLRN reports.

Guest

Transcript

JEREMY HOBSON, HOST:

And we just heard Senator Nelson there talking about the effect of the climate change on Florida. Well, this week, we are running a series of reports looking at the impact of rising seas on South Florida. Today, we want to look at how the real estate market is reacting there.

From the HERE AND NOW contributors network, WLRN's Karen Rundlet reports.

KAREN RUNDLET, BYLINE: Plenty of South Florida realtors would describe the region's housing market as recharged. Single-family home values are up almost 10 percent from a year ago, and there's continued demand for waterfront properties, like luxury homes on the beach. But if you add the threat of rising sea levels to the real estate investment equation, is a 30-year mortgage on a South Florida home a foolish financial investment?

Wayne Pathman(ph) can see the water from his home when he wakes up in the morning.

WAYNE PATHMAN: Well, I've been a resident of Miami Beach my entire life.

RUNDLET: Pathman is a land use attorney. He's been pretty outspoken about rising sea levels. Pathman sees things in his oceanfront neighborhood now that he doesn't remember seeing when he was younger.

PATHMAN: I don't recall, as a young child or a young adult, ever having to worry about flooded areas that would flood even though it didn't rain.

RUNDLET: Pathman's concern about sea-level rise led to his work with the Miami Beach Chamber of Commerce, where he pushed the issue as a council leader. His concern took him to the Netherlands, a low-lying country with nearly half its land mass below sea level. The housing market there would literally be underwater if not for aggressive flood control measures.

PATHMAN: In the Netherlands, it's something that if they don't do it, they won't survive.

RUNDLET: Now, the Dutch have been working through their water challenges for about 800 years. They built an elaborate system of dikes and levees to keep the seawater at bay. Dutch firms were even brought in to create a more thoughtful storm water strategy for New Orleans after Hurricane Katrina. During his trip, Pathman was impressed by both the cooperation and the commitment he saw from the private sector. But he says that's missing in South Florida.

PATHMAN: I think, at this point, there's very little participation from the business community, because they're either not aware, or there's no requirement for them to be there, and there's nothing that's changed in our codes or our construction patterns to require their involvement. And until they are engaged in understanding that this is an issue that's going to affect the entire community and their projects, I think that very little will happen, or it'll happen a lot slower.

RUNDLET: And, more importantly, no one wants to kill the real estate market with negative talk about one of the region's primary economic drivers: growth. Still, enough studies show that when it comes to real estate, the market won't respond to an environmental crisis until the final hour.

Dr. Ken H. Johnson is a director at Florida International University's Real Estate School. He calls himself a market specialist, making it clear he is not an environmental scientist. He says in the case of erosion, housing values don't begin to slide until catastrophe is imminent.

DR. KEN JOHNSON: You would think that there would be some sort of a price discount, perceived cost that the marketplace would pick up on and you'd see a price change. However, this just isn't showing up until the water is right at the property's edge. That tells me the marketplace is not necessarily going to provide a mechanism to solve this and perhaps we're going to need governmental intervention.

RUNDLET: Whether or not your property will be here 30 years from now, Johnson says it may be the insurance issue that determines real estate prices. After all the payouts following Hurricane Sandy, the National Flood Insurance Program went into debt by more than $20 billion. While the price of flood insurance will always be a factor for folks living in known flood zones, Eli Lehrer says there's another more urgent problem beside sea level rise. Lehrer is the president of a Washington, D.C. think tank called the R Street Institute. It focuses on the insurance industry.

ELI LEHRER: Storm surge is a larger and more imminent problem than is sea level rise. Sea level rise is projected to be somewhere between two and five feet over the next century. Storm surge is going to be six feet from a category 1 hurricane, and the chances that a category 1 hurricane hitting Florida are virtually 100 percent.

RUNDLET: Even after a few quiet hurricane seasons, South Floridians haven't forgotten what hurricanes can do, most recently because of Hurricane Wilma and historically because of Hurricane Andrew. Wayne Pathman's optimism is rooted in a long-term view.

PATHMAN: We reacted with good planning. We reacted with changes in our codes, especially our building codes. And we were able to recreate those communities that were hit the hardest by Andrew. And we spawned new development and new industries and new business/ And I think the same can be done in dealing with rising tide.

RUNDLET: But with a rebounding real estate market, public and private leadership might only be able to see the short-term profits. For HERE AND NOW, I'm Karen Rundlet in Miami Beach.

HOBSON: And be sure to tune in tomorrow when we will continue our series on sea level rise in South Florida with a look at how infrastructure adaptations are re-inventing coastal communities' relationship with the sea.

ROBIN YOUNG, HOST:

OK. Some other stories we're keeping an eye on: On Tuesday, voters will cast their ballots in the Florida special congressional election. Between the candidates and the outside groups, some $10 million has been spent for just eight months left in a two-year term. Also, some U.S. senators want to name a prominent building in Washington after Eliot Ness, but the Chicago City Council says the legendary crime fighter does not deserve it. More on these and other stories later today on ALL THINGS CONSIDERED. You're listening to HERE AND NOW. Transcript provided by NPR, Copyright NPR.


Please follow our community rules when engaging in comment discussion on this site.
  • loyal listener

    How’s your vacation going in Miami?

  • dialyn

    I’d love to all these hedge fund managers who are sucking up real estate in Florida end up under water. Unfortunately, it’s going to be people who buy property from them that will be harmed and the hedge fund managers will just go on to profit from someone else’s misery.

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Robin Young and Jeremy Hobson host Here & Now, a live two-hour production of NPR and WBUR Boston.

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