Makes you wonder when coastal property prices start plummeting. And when banks stop granting mortgages for buying coastal homes. I don’t believe this is happening yet.
Is there a way to short these real estate investments and fleece climate-change-denying ideologues who are keeping coastal property values high? Do well by doing good! :D
It's gonna happen over too long of a time horizon (from now, anyway) to profit handsomely off of. There are much better investments you can make today because they will pay off sooner.
I'm surprised they still grant mortgages, a lot of coastal places can't get insurance anymore, a responsible lender wouldn't grant a mortgage on an un-insurable property.
Of course government can always mandate a head in the sand approach...
Then there's the mega wealthy that can always afford a new house anyway, they'll be happy to pay for the location.
Anyone know how insurance companies are reacting? That'd be interesting to watch, since they're all about risk management and have a lot of skin in the game.
Real estate as investment makes sense only where the risk is insurable, and increasingly that's becoming less the case. If insurers won't insure, and banks can't get bailed out, mortgages won't get made, and property values will plummet.
A recent realisation of mine is that the so-called FIRE sector (apt name...), Finance, Insurance, and Real Estate, effectively tripods itself. Finance provides the liquidity, insurance assesses and socialises risks, and real estate provides a huge share of the actual backing assets. If any one leg of that tripod starts to weaken, the entire structure is at risk.
I ran across a pretty good explainer video from the WSJ yesterday on just this topic (or at least the "it's getting harder to insure" bits), mostly addressing California and wildfire, but also mentioning Florida and coastal storms.
Oddly lots of rich and connected are buying coastal properties... You would think their financial advisors would prevent them even if the banks give no resistance
If they're rich, they can afford to experience prime real estate before it's erased forever and if they're connected, they can get a bailout afterwards.
