Market News

 June 18, 2018
New Study Finds 40,000 Georgia Homes Worth $13 Billion will be at Risk from Tidal Flooding

 Accelerating sea level rise, primarily driven by climate change, is projected to worsen tidal flooding in the U.S., putting as many as 311,000 coastal homes in the lower 48 states with a collective market value of about $117.5 billion in today's dollars at risk of chronic flooding within the next 30 years---the lifespan of a typical mortgage---according to a new report by the Union of Concerned Scientists (UCS) released today. Roughly 14,000 coastal commercial properties assessed at a value of nearly $18.5 billion also are at risk during that timeframe. By the end of the century, 2.4 million homes and 107,000 commercial properties currently worth more than $1 trillion altogether could be at risk, with Georgia's coastal real estate significantly exposed.

The analysis combines property data from the online real estate company Zillow with a peer-reviewed methodology developed by UCS for assessing areas at risk of frequent flooding. Using three sea level rise scenarios developed by the National Oceanic and Atmospheric Administration and localized for this analysis, UCS determined how many residential and commercial properties along the entire lower 48 coastline are at risk of becoming chronically inundated from high tides---flooding on average 26 times per year or more (or the equivalent of once every other week)---in the coming decades even in the absence of major storms. The core results in the report are from the high sea level rise scenario---an appropriately conservative projection to use when estimating risk to homes, which are often the owner's single biggest asset. This scenario projects an average of 2 feet of sea level rise for Georgia in 2045 and 7.1 feet in 2100. The analysis also projects how many properties might avoid such flooding if sea level rise is constrained through the achievement of the long-term temperature goals of the Paris Agreement and if ice loss is limited.

The results for Georgia are quite sobering. The analysis finds that without additional measures to adapt to rising seas:

*By 2045, more than 6,000 of today's residential properties, currently home to about 11,000 people, are at risk of chronic inundation. The total number of at-risk residential properties jumps to more than 40,000---home to about 79,000 people---by 2100.

*By 2045, more than $2.2 billion-worth of residential property (based on today's values) are at risk of chronic flooding. The homes that would face this flooding at the end of the century are currently worth roughly $13 billion.

*The Georgia homes at risk in 2045 currently contribute about $24 million in annual property tax revenue. The homes at risk by 2100 currently contribute roughly $139 million collectively in annual property tax revenue.

*St. Simons and Tybee Island are projected to be particularly affected, with each having more than 1,000 homes at risk in 2045 and more than 7,000 at risk in 2100. More than one-quarter of St. Simons' population is elderly and may be especially vulnerable to this threat.

*Some places with large, traditionally underserved communities may be particularly at risk. Brunswick, for example, where nearly one-half of residents are African-American and nearly one-third live below the national poverty line, is projected to have more than 800 at-risk homes in 2045, which would put 20 percent of its property tax base at risk.

*By 2045, more than 300 of today's commercial properties in Georgia, currently assessed at about $86 million, would experience chronic inundation. In 2100, this number jumps to roughly 3,000 properties---assessed at approximately $461 million today.

*If nations adhere to the primary goal of the Paris Agreement---capping warming to below 2 degrees Celsius---and there is limited loss of land-based ice, about 84 percent of Georgia's at-risk homes would avoid chronic flooding by the end of the century, thus safeguarding the vast majority of property values and annual property tax revenue.

Once market risk perceptions catch up with reality, the potential drop in coastal property values could have reverberations throughout the economy---affecting banks, insurers, investors, and developers---potentially triggering regional housing market crises. Homeowners whose properties become chronically inundated may find themselves with mortgages that exceed the value of their homes or face steeply rising flood insurance premiums and may end up defaulting on their loans. Lenders carrying large numbers of these risky mortgages could lose money or even become insolvent, with smaller banks concentrated in areas with high flood risk being especially exposed. Coastal real estate investors and developers may similarly experience financial losses in some coastal areas.

There are currently many federal, state and local policies that, while originally well intentioned, mask risk and create incentives that reinforce the status quo or even expose more people and property to risk. The market's bias toward short-term decision-making and profits can also perpetuate risky development and investment choices. These flawed policies and incentives include incomplete or outdated flood risk information, subsidized insurance, lax zoning and building codes, incentives for business-as-usual building and re-building, and incomplete credit ratings. Identifying and improving upon the most important policies and market drivers of risky coastal development is a necessary, powerful way to better protect communities and move Georgia and the nation toward greater resilience.