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Climate change and real estate: Real concerns for the future

By 2050, sea levels around New York City are expected to rise as much as 2 1/2 feet. This is something that should concern anyone thinking about buying waterfront property in the future.

A lot of people think of waterfront property as their dream purchase because a certain lifestyle goes along with the property. However, growing concerns over climate change are making buyers shy away from their dreams because they're concerned that the waterfront property market could literally go under water in the foreseeable future.

The concern isn't just hitting home buyers, either. Freddie Mac's chief economist has predicted that rising sea levels and increasing storms will eventually cause people to start leaving waterfront properties (and mortgages) behind—and the properties won't eventually recover their value but continue to decline. Long before the market falls apart, however, home owners may be plagued by "nuisance" flooding that gradually erodes property values. Just a foot or two of extra water can leak into basements, wash out access roads and contaminate groundwater.

What does all of this mean for you if you still want to buy waterfront property? First, you need to be aware that lenders may be more reluctant to extend large loans unless they have some good information about the long-term safety of the property. Check into local community and government initiatives to see what is being done to prevent current and future problems due to nuisance flooding. The more proactive a community is being about future flooding issues, the better.

You should also look into how problems with recent flooding (or the fears of future flooding) are changing the landscape of businesses in your area. If businesses are relocating because of actual or feared financial losses due to flooding, that can also affect the future value of your home. On the other hand, if real estate development is healthy in the area, that's a good sign for the future. Investors don't invest in something that they don't think will exist in a few years.

Finally, you need to be aware that insurance for waterfront property is higher and not every insurance company provides it. The high cost of flood, wind, and general hazard insurance has to be factored in when you're deciding if the purchase of waterfront residential property is right for you.

Source: www.nytimes.com, "Perils of Climate Change Could Swam Coastal Real Estate," Ian Urbina, Nov. 24, 2016

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