How climate gentrification is changing coastal real estate

[Algernon Moncrieff]

CNBC

A modern glass home sits on the edge of the water in Miami Beach. The ground-level master suite has a soaking tub that looks out to the ocean, and the bedroom's glass doors allow the owner to roll out of the sheets and onto the yacht. It is listed for sale at $25 million.

Another Miami home sits on a garbage-strewn street in Little Havana, about five miles inland. Its owner can walk out the front door and see a dead chicken in the street. It is listed for sale at $559,000, but some experts claim it is a better investment than $25 million mansion.

The mansion, while highly desirable and exquisitely appointed, is paradise at a price, because rising tides and increasingly extreme storms may already be lowering its value. On the other hand, the home in Little Havana, which sits on high ground with little risk of flooding, is appreciating at a fast clip. It has nearly doubled in value in just the past two years, according to Zillow.

"What we see here is a theory of climate gentrification that suggest that in Miami, higher elevation land will be worth more," said Harvard University's Jesse Keenan, who co-authored the first peer-reviewed study offering evidence of the existence of a climate change signal in the real estate market.

[Loki Liesmith]

1. "Climate gentrification"

Easier just to call it rational real estate investing.

[BigmanPigman]

2. What I do not understand is when people

lose their homes due to flooding and other climate realated causes and rebuild them in the same location. To me it is like throwing your money into the rising waters. What insurance companies are even going to insure these homes let alone new ones being built in high risk areas?

[Algernon Moncrieff]

3. Right now flood is a federal insurance

In some cases, like along coasts, federal influence has allowed rebuilding. If flood gets privatized, chances are that ends.