The Impact of Sea Level Rise on Real Estate Prices in Coastal Georgia

Abstract

This paper adopts a hedonic pricing model to study the impact of vulnerability to inundation from sea level rise on home prices in Savannah, Georgia. We find that homes most at risk from sea level rise are associated with an approximate 3.1 percent price discount. The results are consistent with prior studies, which uses data from different locations in U.S. coastal areas. We also find that the discount is more significant in our later sample period, indicating that house buyers may be becoming more aware of the climate risk. This paper contributes to the understanding of house pricing factors in the study area regarding the sea level rise effects.

Physical and climate change-related risk identification in valuation practice: an Australian perspective

“…In the context of understanding climate change risks, for many of the extant risks noted, climate change will exacerbate the extent, severity and frequency of event-based risks like floods, storm surges, extreme weather events, droughts, heatwaves and bushfires (see Warren-Myers and Hurlimann, 2021 for a list of property-specific implications). There is some emerging evidence that flooding and storm-surge considerations (due to hurricanes) are manifesting as a sea level rise threat, and the need for protection measures has seen early investigations on property prices (Beck and Lin, 2020; Bernstein et al , 2019; Walsh et al , 2019). However, other research suggests that sea level rise effects are not yet evident due to a lack of disclosure of information (Fuerst and Warren-Myers, 2019); that discounting is only found in neighbourhoods where home owners believe in climate change (Baldauf et al , 2020); where other factors are presently overriding the potential future risk considerations (Eichholtz et al , 2019); or where there is no evidence to suggest the market is yet pricing in sea level rise risk (Filippova et al , 2020).…”

Rising Seas, Rising Inequity? Communities at Risk in the San Francisco Bay Area and Implications for Adaptation Policy

“…For example, both damaged and non‐damaged houses experienced a negative price impact after Hurricane Sandy in New York, driven by increased flood insurance rates and perceived risk from buyers (Ortega & Tapinar, 2018). However, coastal properties in Savannah, Georgia, showed small price discounts of only a few percent from 2007 to 2016 despite being exposed to several feet of sea level rise (J. Beck & Lin, 2020). Similar price discounts were found for high‐risk properties in Miami‐Dade County, FL, but interestingly these were lower for highly priced properties purchased as non‐primary residences, suggesting a greater risk tolerance by wealthy buyers (Fu & Nijman, 2020).…”

“…However, coastal properties in Savannah, Georgia, showed small price discounts of only a few percent from 2007 to 2016 despite being exposed to several feet of sea level rise (J. Beck & Lin, 2020). Similar price discounts were found for high-risk properties in Miami-Dade County, FL, but interestingly these were lower for highly priced properties purchased as non-primary residences, suggesting a greater risk tolerance by wealthy buyers (Fu & Nijman, 2020).…”