The real estate market is expected to undergo rampant changes as the macroeconomic and geological factors pile on. One of the most significant changes is the declining demand for coastal real estate as the climate change concerns amp up. Rising sea levels currently endanger once-coveted beach houses and by-the-sea properties. Fundrise co-founder and CEO Ben Miller also expects the disproportionate diaspora toward the Sunbelt region to bring down the value of coastal properties, which he discussed in a recent interview with Yahoo! Finance.
Climate Change And At-Risk Coastal Properties
The coastal real estate market in the U.S., valued at more than $1 trillion, is losing luster rapidly. Coastal properties across New Hampshire, Massachusetts, Rhode Island and Maine have already lost a combined $403 million in value, per data released by the First Street Foundation and Colombia University. According to Freddie Mac, the economic costs of flooding across the U.S. coast are estimated to be “greater than those experienced in the housing crisis and the Great Recession.”
This is not surprising, as climate change has continued to wreak havoc globally. In 2022 alone, most of the western nations in the northern hemisphere are facing severe wildfires and heat waves, with countries experiencing record high temperatures. On the other hand, several south Asian countries are experiencing immense flooding. The current crisis in the Southeast Asian nation of Pakistan is already dubbed a “climate catastrophe” by the United Nations.
Future of Real Estate
Despite the recent slump in housing demand across the U.S. and the declining value of coastal properties, Miller is optimistic about the real estate market. As the equities and bond markets continue to underperform amid sky-high inflation rates, real estate is one of the most stable assets to invest in. Fundrise-sponsored real estate funds have outperformed the stock market by a whopping 25% in the first half of this year, and Miller expects this trend to continue.
