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Coming crisis of coastal flooding: $1 trillion of real estate at risk by 2100

New report argues for fast response to slow-motion crisis of climate change, chronic flooding, and property damage

A vehicle drives through flooded streets caused by the combination of the lunar orbit which caused seasonal high tides and what many believe is the rising sea levels due to climate change on September 30, 2015 in Fort Lauderdale, Florida.
A vehicle drives through flooded streets caused by the combination of the lunar orbit which caused seasonal high tides and what many believe is the rising sea levels due to climate change on September 30, 2015 in Fort Lauderdale, Florida.
Getty Images

Flooded property, underwater mortgages, ruined coastal real estate markets, and the catalyst for a wider economic crash: A coming age of increased coastal flooding poses nothing less than a “significant and growing risk.”

According a new analysis of coastal flooding prepared by the nonprofit Union of Concerned Scientists, the nation is at risk of sustained and widespread damage to real estate markets due to rising sea levels. “Underwater: Rising Seas, Chronic Floods, and the Implications for US Coastal Real Estate,” which utilizes Zillow data to gauge the rising food risk to U.S. property markets on a ZIP-code-by-ZIP-code basis, expects significant damage in the coming decades.

By 2045, roughly 300,000 homes and commercial properties in the continental United States may face chronic, disruptive flooding, threatening $135 billion in property, and potentially forcing the more than 280,000 current residents to adapt or relocate. And since financial markets do not currently account for this risk, and property values in coastal markets don’t reflect this potential damage, the nation remains unprepared for the significant financial loss set to upend coastal areas.

Despite dour predictions for coastal regions, “Underwater” argues that the damage is far from limited to waterfront communities. The potential reverberations of a coastal real estate crash, and the permanent devaluations of valuable investments, may lead to serious repercussions for the national economy at large.

The widening circle of impact from flooding

The report paints a picture of a slow-motion crisis as water levels creep up and cripple local property values. The report found that residential real estate in Florida and New Jersey will be most at risk of chronic flooding, with 64,000 and 62,000 homes, respectively, facing chronic flooding by 2045 (defined as flooding that occurs 26 times or more per year). Certain communities in these states would bear the brunt of the damage. Miami Beach alone contains 12,000 of the affected homes, and 10 New Jersey beach towns would contain at least 1,500 homes or more, with Ocean Beach having 7,200.

Projecting out until 2100, Florida would have more than 1 million homes at risk, accounting for 40 percent of the nation’s at-risk homes. In New Jersey, 250,000 homes would be repeatedly flooded by the turn of the next century.

Other coastal metro areas would also face extensive new flooding risk. In Long Island, Suffolk, Nassau, and Queens counties would contain more than 15,000 homes at risk of chronic inundation, which house nearly 40,000 people and account for $7.7 billion in value. While San Francisco itself would only have 270 at-risk homes by 2045, surrounding counties contain 13,000 threatened homes valued at $8.6 billion.

Rising flooding risks impact much more than property. Infrastructure, including roads, bridges, power plants, airports, ports, public buildings, and military bases, face the risk of chronic inundation. They’re not included in this risk analysis, but they do factor into the incredible damage increased coastal flooding will place on local governments.

Communities with highest potential flooding-related real estate losses

Name State Homes at risk Value at risk Property tax at risk Population currently housed in at-risk homes
Name State Homes at risk Value at risk Property tax at risk Population currently housed in at-risk homes
Miami Beach FL 12,095 $6,443,424,737 $91,013,636 15,482
Southampton NY 594 $3,632,414,659 $70,466,512 778
Ocean City NJ 7,251 $3,559,834,800 $31,992,269 4,061
Central Coast CA 2,652 $3,515,837,640 $38,029,502 5,887
San Jose CA 2,574 $2,587,275,046 $29,536,278 7,104
San Mateo CA 3,825 $2,126,449,685 $28,542,062 9,716
Miami FL 5,718 $2,115,800,018 $37,261,591 13,037
Long Beach NJ 2,912 $2,027,390,300 $19,946,350 961
Upper Keys FL 3,514 $1,838,699,914 $16,273,796 3,865
Bradenton FL 4,368 $1,837,661,024 $21,225,539 7,600
Key West FL 3,709 $1,675,527,450 $14,684,991 6,491
Hilton Head Island SC 2,716 $1,486,650,600 $13,196,567 3,042
Hempstead NY 4,571 $1,447,384,405 $41,899,956 13,302
Lower Keys FL 3,415 $1,398,112,163 $12,975,389 4,508
Avalon NJ 1,351 $1,339,607,500 $7,309,545 338
Charleston Central SC 1,629 $1,333,885,777 $11,476,441 2,883
Toms River NJ 3,648 $1,317,185,100 $29,650,131 7,551
Kiawah Island-Seabrook Island SC 1,562 $1,315,627,363 $13,056,057 937
Long Beach-Lakewood CA 1,938 $1,299,068,902 $15,610,079 5,136
West Palm Beach FL 771 $1,210,159,069 $17,281,943 1,365
Foley AL 3,422 $1,204,521,095 $5,378,103 3,833
Sea Isle City NJ 2,006 $1,192,216,600 $7,974,321 622
Queens NY 2,735 $1,177,852,265 $9,504,807 7,193
Beach Haven NJ 1,372 $1,091,621,100 $11,634,246 604
Nantucket MA 283 $1,008,239,000 $3,417,931 246
This 2018 chart reflects potential loses by 2045 Union of Concerned Scientists/Zillow

In short, many coastal cities and towns will be slammed by decreasing tax revenue and increasing infrastructure and repair costs. By 2045, according to “Underwater,” 120 communities will see 20 or more percent of their tax base destroyed, with 30 communities seeing more than half the property tax base at risk. This means chronic budget shortfalls and a lack of crucial funds for school, police, fire, and public services, at a time when repeated flooding will demand more of those services.

A total of 175 communities nationwide can expect significant chronic flooding by 2045, 40 percent of which already have poverty above the national average. Louisiana, North Carolina, New Jersey, and Maryland have a significant number of threatened communities with above-average rates of poverty.

By 2100, as many as 2.4 million residential properties and 107,000 commercial properties, worth $1.07 trillion today, would be at risk of chronic flooding. That’s equivalent to Florida’s entire gross domestic product. Those homes currently house 4.7 million Americans, roughly the current population of Louisiana.

A nationwide economic crisis, unfurling in slow motion

The economic impact, and costs of recovery, would be tremendous. Some of the first real pain would be felt in the coastal vacation market. Tens of thousands of resort homes would be at risk. Popular areas such as Galveston, Texas; Kiawah Island, South Carolina; and Cape Hatteras, North Carolina, would be at significant risk of sustained damage and a diminished tax base.

In addition to displacement, one of the real long-term threats would be diminished property value in hard-hit areas, what could be termed coastal blight. As properties become repeatedly flooded and more at risk, resale values will plummet, eventually becoming unsellable. Homeowners will be unable to purchase flood insurance, and will eventually be saddled with underwater mortgages, in multiple sense of the term.

While the individual financial ruin is painful enough, this creeping crisis will impact entire neighborhoods. A “rash of coastal foreclosures and abandoned homes could ensue, causing neighborhood blight and millions of dollars in lost wealth,” according to the report. Large numbers of untended, and even abandoned, homes will push down the value of surrounding real estate.

In the worst-case scenario, these local crises turn into national panics. Bonds tied to these investments will lose value. Insurers covering residential and commercial properties in these areas risk unsustainable payouts. Investors and developers stand to lose millions. When enough actors in the property begin to act to avoid the end game of increased flooding risk, it could prove a catalyst for a wider meltdown in regional housing markets, and even spark a wider economic crisis.

We need better data, and a coordinated national response

This report is predicated on current “business-as-usual” climate change models and temperature changes. To avoid the worst-case scenarios outlines in “Underwater,” a forceful, coordinated response is needed.

Homeowners and investors need better information, especially risk analysis reflecting the coming risk of rising waters. The maps used for the National Flood Insurance Program only show current risk; updating them to reflect, for instance, the risk that would increase during the course of a 30-year mortgage would lead to better long-term investment decisions.

In addition to “subsidized, myopic development choices; and the continued attraction of seaside property and vibrant coastal economies,“ the local property ecosystem needs to take more responsibility for diagnosing and understanding risk. In some cases, the actors in coastal real estate markets, from developers and insurers to banks and zoning regulators, worsen the problem by ignoring or minimizing it.

Even with current understanding of the risks of flood-prone areas, development tends to march on. In Florida and New Jersey, 15 to 20 percent of the at-risk homes in the 2045 scenario mentioned earlier have been built since 2000. In New Jersey, 2,600 homes rebuilt since Hurricane Sandy stand on ground that will soon be at risk of chronic flooding.

Then, of course, there’s the issue of limiting carbon emissions and global warming. If the global community stays at the Paris Agreement of capping warming below 2 degrees Celsius, and with limited loss of land-based ice, the United States could avoid substantial financial losses. Properties valued at $780 billion, which contribute $10 billion annually in property tax revenue and house 4.1 million people, could be spared from flood risk or other issues by 2100.

Due to the already-shifting physical environment, and the accelerating risk of market swings, or a collapse, attributable to new property risk, there is a “national imperative” to prepare our communities, the report concludes. The federal government has a unique role and responsibility to face this challenge; only a national political response can deliver the tools and guidance to create “more resilient choices and equitable outcomes along our imperiled coasts.

“We have scant time remaining to brace our communities, and our local and national economies, for this challenge.”