A.G. Gancarski
Will mortgages and markets stay afloat in Florida?
A case study from the McKinsey Global Institute contemplates that question, noting that global warming and related phenomena likely would wreak havoc on insurers, property owners, and ultimately, global supply chains.
“A climate-related devaluation of property prices in Florida would cascade throughout the state economy, affecting government tax revenue, GDP, commercial development, and population growth,” the April 2020 report contends.
Florida, one of nine ” leading-edge examples of climate change risk” the study spotlights, faces challenges from both natural phenomena (increasingly volatile storms) and unnatural phenomena (the propensity of people to build in flood-prone areas without regard to exposure to said storms).
“Florida, with its low-lying terrain, large coastline and share of population exposed to climate change effects, as well as its economic dependence on real estate, may be particularly at risk,” McKinsey asserts.
Two-thirds of the state’s people live near the coastline.
Average annual losses, $2 billion per year now, are forecast to increase to $4.5 billion by 2050.
However, the real black swan scenario is the “100 year flood” type event that appears to be becoming more regular than once a century.
“Damages from such extreme events are expected to be $35 billion today and could grow by 40 to 110% to $50 billion to $75 billion by 2050.”
More than one in four people live in a 100-year flood zone, McKinsey asserts.
The report outlines a scenario in which property values plummet.
“Based on historical experience, we conservatively estimate a total devaluation of about $10 billion to $30 billion of affected homes by 2030, rising to $30 billion to $80 billion by 2050, or about the equivalent of a 5 to 15% impact in 2030 and 15 to 35% in 2050, all else being equal.
“The devaluation could be larger, and potentially result in an absolute decline in the value of homes relative to their prices today, for example, if flooding regularly affects public infrastructure or if home owners more aggressively factor climate risk into their buying decisions,” the report contends.
Tidal flooding, expected to happen 200 times a day by 2050, is expected to wreak havoc also, potentially spawning $80 billion in devaluation by 2050.
4 comments
Ray Blacklidge
April 29, 2020 at 10:48 am
If a large meteor hit off the coast of Florida, coastal real estate values would plummet and it would wreak havoc on insurers, property owners, and ultimately, global supply chains.
A climate-related devaluation of property prices in Florida would cascade throughout the state economy, affecting government tax revenue, GDP, commercial development, and population growth.
Just saying
BeliveItOrNot
April 29, 2020 at 11:25 am
Climate change is real, but not new. Al Gore said the things described above, would occur by 2012. Ocasio Cortez and her crowd of soothsayers, have recently changed the date to 2029. We have seen religious zealots for years, making similar claims.
The earth’s climate has changed since earth began and will continue to do so, regardless of what man does or doesn’t do.
Those who blame climate change, solely on man, have not studied the history of the earth, and have made their beliefs into a cult-like religion. They, together with a lot of unscrupulous “scientists,” and many “unscrupulous” politicians, have made this into a political issue.
I have always believed that, one day, those who built and live on our oceans, would suffer huge losses. I can recall, when Orlando, in the center of the State, was under about 6 feet of water.
It doesn’t take a study, or a scientific guess to realize that Florida is a danger zone for flooding…it always has been. And, property values in areas of Florida that have been destroyed by Hurricanes, and/or flooding, have always seen values drop precipitously.
Why anyone would have to publish a study of the obvious, is puzzling. This study is another waste of money in my opinion.
Dirks Truckly
April 29, 2020 at 12:32 pm
Yeah… sure. What are these libs gonna say next? That a virus could wreck the economy?! We’re America with Trump. Nothin can stop us baby! Whoooo!! (Shotguns a beer)
Corbin Supak
April 29, 2020 at 5:04 pm
99% of scientists are not ‘unscrupulous’, they deal in facts, like it or not. We can act to stop it, or not.
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