An underwater home typically refers to a mortgage that is higher than the property's value. But as rising seas are expected to increasingly flood South Florida, scientists and economists have warned that the term might be taken literally one day.
A new study recently released by Zillow, the online real estate database, has quantified the effect of sea level rise on property values, and the findings are startling: $413 billion worth of properties are at risk of being at least partially submerged in Florida by 2100 — the most of any state, accounting for half of the nation's total projected $882 billion worth of property at risk of being flooded.
"That could even be a low number," says Stephen Tilbrook, an environmental lawyer based in Fort Lauderdale. "We haven't developed an understanding for a lot of impacts of sea level rise yet."
For years, experts have speculated that rising waters will instigate another housing crisis. Of course, the shock of a sea-level-induced market crash will be felt the worst in Florida, where one in eight houses is at risk of being at least partially underwater if sea levels rise six feet by 2100. There has been some discussion about brokers considering the effects of sea level rise before issuing 30-year mortgages and realtors disclosing flood risk to potential buyers.
So far, though, the looming threat of sunken homes in Florida has gone mostly unchecked.
"I don't see the attitudes changing," Tilbrook says. "People still want to live here. I don't see them taking the potential risk into consideration for their living choices."
It's tricky to quantify projected loss of homes to sea level rise. The Zillow study used maps released by the National Oceanic and Atmospheric Administration that showed which parts of coastal states will be underwater if sea levels rise six feet — the amount projected to occur by 2100 if climate change goes unchecked. Then, using their database of more than 100 million homes, analysts determined which properties were at risk of being at least partially submerged by 2100 and calculated how much they were currently worth.
Across the country, 1.9 million homes, which makes up two percent of the market, are at risk of being partially submerged by 2100. Florida has the highest percentage of homes at risk (12.56 percent, or one in eight) and the highest value of properties at risk ($413 billion). Hawaii has the second highest percentage (9 percent and one in ten homes at risk). New Jersey has the second highest value of properties at risk ($93.1 billion).
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Albert Slap, the cofounder of Plantation-based sea level rise adaptation firm Coastal Risk Consulting, believes that realtors and mortgage lenders should be doing more. It doesn't make sense, Slap says, that banks require some homes to have flood insurance in order to qualify for mortgages, but risk to sea level rise is currently not evaluated.
When taking a loan, banks use a FICO Score to determine consumer credit risk — how likely it is that a buyer will pay back loaned money. Slap says in light of the rising seas and flooding, however, banks should also calculate a flood risk score to determine a property's "life expectancy."
"Every seller needs to disclose the flood situation in their home and drive way, and realtors need to disclose which neighborhoods or roads flood," Slap says. "Zillow says that there's nearly a trillion dollars in losses, so [real estate leaders] need to start walking the walk."