Predicted rising sea levels are already beginning to affect US real estate values in areas that are felt likely to flood in the future.
It has been estimated by some experts that by the year 2100 millions of properties in America could be under threat, with a combined worth of over one trillion dollars.
According to a recent study from researchers at Pennsylvania State University and the University of Colorado at Boulder, homes that are vulnerable to rising sea levels already sell for around 7 per cent less than similar unexposed properties.
The most obvious market to be threatened is Florida, where low-lying land means that rising sea levels may leave over one million properties at risk of flooding.
However, Florida is not the only area at risk. Hilton Head, South Carolina, has nearly $1.5 billion worth of property that could be lost by 2045, and Charleston, South Carolina, has seen exposed homes already losing $266 million in value since 2005 due to coastal flooding and impending sea level rise.
Other communities such as Foley, Alabama; Nantucket, Massachusetts; and Queens, New York, could lose more than $1 billion each in real estate by 2045.
Many sophisticated investors that often invest in multiple properties are already taking notice and factoring possible climate change into their property purchases. The researchers expect this to increase as time goes on.
Ultimately, the researchers find that the real threat to property values is the likelihood of environmental hazards, in particular rising sea levels, not the present-date quality of a property.
After controlling for factors like waterfront views, remodels, and areas that experienced recent flooding, the researchers found a significant association between vulnerable properties and discounted rates.
The more worried a community is about rising sea levels, the more likely these properties are to fetch a discount.
Overseas property investors looking to dip their toe into the US property market may want to research their preferred area carefully, to make sure they don’t get in over their head.