“Climate gentrification” is changing Miami real estate values – for better and worse

Desdemona Despair

Rising Risks: Climate gentrification takes hold in Miami from CNBC.

By Diana Olick and Erica Posse   
29 August 2018

(CNBC) – A modern glass home sits on the edge of the water in Miami Beach. The ground-level master suite has a soaking tub that looks out to the ocean, and the bedroom’s glass doors allow the owner to roll out of the sheets and onto the yacht. It is listed for sale at $25 million.

Another Miami home sits on a garbage-strewn street in Little Haiti, about five miles inland. Its owner can walk out the front door and see a dead chicken in the street. It is listed for sale at $559,000, but some experts claim it is a better investment than $25 million mansion.

The mansion, while highly desirable and exquisitely appointed, is paradise at a price, because rising tides and increasingly extreme storms may already be lowering its value. On the other hand, the home in Little Haiti, which sits on high ground with little risk of flooding, is appreciating at a fast clip. It has nearly doubled in value in just the past two years, according to Zillow.

“What we see here is a theory of climate gentrification that suggests that in Miami, higher elevation land will be worth more,” said Harvard University’s Jesse Keenan, who co-authored the first peer-reviewed study offering evidence of the existence of a climate change signal in the real estate market.

The study tracked the values of more than 100,000 single-family homes across Miami going back 45 years.

“What we found is that the higher elevation properties are essentially worth more now, and increasingly will be worth more in the future,” Keenan said. “Populations, including speculative real estate investment will densify in these high elevation areas.”

Keenan claims home values on Miami’s coast are already worth 10 percent less now than they would be if climate change didn’t exist. [more]

Rising Risks: ‘Climate gentrification’ is changing Miami real estate values – for better and worse

By Travis Dagenais
14 June 2018

(Harvard Graduate School of Design) – In April, the Harvard Graduate School of Design’s Jesse M. Keenan served as the lead author of the first published study to provide evidence of a climate-change signal in a real estate market. The study’s findings have stoked a national and international conversation concerning the extent to which climate change is impacting people’s lives and households.

Keenan positioned the implication of these findings within his broader theory of “climate gentrification.” As Keenan and co-authors write, climate gentrification is a descriptive theory proposing that, as climate change and its effects accelerate, certain geographies and property markets could become more or less attractive, based in part on levels of exposure to climate change-related effects and risks, as well as the contextual response to and capacity for addressing these impacts. For instance, rising seas may make traditionally sought-after coastal property less favorable, while inland higher-elevation properties suddenly become more desirable.

Keenan and his colleagues’ study, titled “Climate Gentrification: From Theory to Empiricism in Miami-Dade County, Florida,” was published on 23 April 2018 by Environmental Research Letters (Volume 13, Number 5), and takes Miami-Dade County, Florida as a case study to explore the processes and market mechanisms wound up in the theory. Keenan and colleagues test two hypotheses: that price appreciation of single-family properties in Miami-Dade County is positively related to, and correlated with, incremental measures of higher elevation; and, that the rates of price appreciation in lower elevations, where flood risks are higher, have been outpaced by rates of appreciation of higher-elevation properties in recent years.

The researchers’ findings validated both hypotheses and suggest the potential existence of consumer preferences that are based, in part, on perceptions and observations of flood risk and sea-level rise.

The release of Keenan and his colleagues’ study was covered by two front-page stories at The Wall Street Journal. The study has since been covered by media from around the world in over a dozen languages. And, since the April release, Keenan has offered a series of elaborations on and discussions of his findings, including a two stories with Bloomberg News and a front-page feature in the Miami Herald.

Renowned author and journalist, Andrew Revkin cited the paper as a “rich new exploration.” While Professor Isabelle Anguelovski lauded the work as “a groundbreaking empirical paper.” Dr. Rachel Cleetus, Lead Economist and Policy Director for Climate and Energy Program at the Union of Concerned Scientists noted that “Keenan’s research is innovative and ground-breaking. By bringing together empirical evidence of the effects of sea level rise on coastal property values, and subsequent impacts on economically vulnerable populations further inland who might be displaced by climate gentrification, his work shows how climate change is already altering our economy and society.”

More recently, Keenan’s work and perspectives have been covered by CNN, Slate, Fortune, Huffington Post, NPR, regional public radio, and elsewhere.

Jesse M. Keenan is a member of the faculty of the Harvard Graduate School of Design, where he teaches courses and conducts research in the fields of urban development and climate adaptation. Keenan’s research in the built environment has been supported by or in partnership with a variety of global actors, including the American Institute of Architects, Audi, Carnegie Corporation, Goldman Sachs, Google, International Code Council, Hoover Institution at Stanford University, Knight Foundation, MoMA, Mori Foundation, Lennar Foundation, National Academy of Sciences, NASA, National Security Council, National Institute of Standards and Technology, Open Society Foundation, Regional Plan Association, Rockefeller Foundation, the White House, and the U.N.

Keenan was nominated by the U.S. State Department and appointed by the U.N. this spring to serve as member of the Intergovernmental Panel on Climate Change (IPCC). Keenan is concurrently serving as Research Advisor for Climate Adaptation Finance for Governor Jerry Brown’s Office of Planning and Research for the State of California and as Visiting Scholar at the Federal Reserve Bank of San Francisco.

Jesse M. Keenan first to publish evidence of climate-change effects in a real estate market; WSJ, CNN, and others ground global coverage

ABSTRACT: This article provides a conceptual model for the pathways by which climate change could operate to impact geographies and property markets whose inferior or superior qualities for supporting the built environment are subject to a descriptive theory known as “Climate Gentrification.” The article utilizes Miami-Dade County, Florida (MDC) as a case study to explore the market mechanisms that speak to the operations and processes inherent in the theory. This article tests the hypothesis that the rate of price appreciation of single-family properties in MDC is positively related to and correlated with incremental measures of higher elevation (the “Elevation Hypothesis”). As a reflection of an increase in observed nuisance flooding and relative SLR, the second hypothesis is that the rates of price appreciation in lowest the elevation cohorts have not kept up with the rates of appreciation of higher elevation cohorts since approximately 2000 (the “Nuisance Hypothesis”). The findings support a validation of both hypotheses and suggest the potential existence of consumer preferences that are based, in part, on perceptions of flood risk and/or observations of flooding. These preferences and perceptions are anticipated to be amplified by climate change in a manner that reinforces the proposition that climate change impacts will affect the marketability and valuation of property with varying degrees of environmental exposure and resilience functionality. Uncovering these empirical relationships is a critical first step for understanding the occurrence and parameters of Climate Gentrification.

Climate gentrification: from theory to empiricism in Miami-Dade County, Florida