A forthcoming paper in the Journal of Financial Economics finds that homes in the way of future sea level rise are selling for less now.
The study looked at homes that could expect to see flooding because of sea level rise, and compared them to similar homes with barriers like levees or natural hills that would protect them.
Ryan Lewis is a finance professor at the University of Colorado at Boulder and a co-author of the study. He says that nationwide, homes exposed to sea level rise sell for about 7% less than equivalent homes. In Massachusetts, the figure is even higher, around 9-10%.
The study also found that there’s another way Massachusetts buyers are behaving differently:
In other parts of the country, investors are driving the discount. These are people buying second homes or rental properties—they’re generally considered more sophisticated buyers. But here in Massachusetts, every category of homebuyer is demanding that discount.
Lewis says Massachusetts is generally considered an eco-conscious state. People here are likely to be aware and concerned about the impacts of climate change, which could be reflected in discounted home prices.
The study doesn’t get more granular than the state level, but Kathy McDonough, a longtime appraiser here on the Cape, says it’s been harder to sell homes since last winter’s storms.
"We're seeing longer listing times," she says. "People will put [homes] on the market, and they're not selling...a lot of times, they'll just take them off the market and wait for another season. I haven't seen real [price] decreases yet, but I think we will."
The bottom line is that climate change is already affecting the price of coastal real estate in Massachusetts. If we’re not quite seeing it yet on the Cape, the question is when.