Miami Forecast: Rising Sea Risks Could Hurt Housing
There is certainly no overwhelming consensus about why the ocean around Miami is rising, but it is indisputable that “sea-rise risks” such as flooding are likely to affect the local real estate market in the near future. In fact, one billion-dollar wealth management company manager is so concerned he is advising clients to exit their South Florida real estate investments entirely.
“Vulnerable real estate is real estate that could go underwater – literally, not figuratively,” said Marc Singer, founder of Singer Xenos Wealth Management. While he is not telling clients to fire-sale their portfolios in the area, he is recommending they keep at least half of their property portfolios out of vulnerable markets, including Miami. Singer said he expects South Florida real estate to drop as much as 30 percent in the next few years even without the exacerbation of rising sea levels and referred to this drop as “a reasonable correction” given the market’s recent history. “The catalyst may be a real estate correction due to economic cycles, but because of the fear of rising seawater, it might not come back up,” he said, citing an oversupply of luxury condominiums, rising costs of hurricane and flood insurance, and the potential for skyrocketing property tax rates as local governments upgrade city infrastructures intended to protect communities from flooding.
When concerns about rising sea levels are compounded with alarm over Florida’s “red tides,” caused by algal blooms that can cause health problems for people with respiratory conditions, the effect on housing could be more widespread than just in South Florida. Red tides are associated with deaths of sea turtles, manatees, dolphins, whales, and other marine life. These blooms were reported in waters near Miami the first week in October and, out of what Miami-Dade County mayor Carlos Gimenez referred to as “an abundance of caution,” local beaches closed in response. The beaches have reopened, but the stigma and concern may remain indefinitely. Red tides also create problems for inland real estate as a result of smells associated with the algae and with the dead marine life. In Sarasota County, for example, more than 100 tons of dead fish were removed from the beaches this past April.
Do you own real estate in Miami? Would you sell if you did?