Rising tides sink property values
The world is changing; it seems natural that prices for large purchases such as homes would change, too. However, the sale price of homes exposed to sea level rise (SLR) could be less about change than about how people perceive and value that change.
CU Boulder Leeds School of Business Assistant Professors Asaf Bernstein and Ryan Lewis have been investigating how perception can affect real-world markets through the curious pricing of beach properties.
After researching thousands of land parcel sales from 2007 to 2017, Bernstein and Lewis discovered that SLR-exposed properties sold for an average of 7 percent less than comparable properties that were not exposed.
Why the discount? Buyers, especially 鈥渟ophisticated buyers鈥 purchasing properties as investments, appear to factor SLR exposure into their valuation of coastal properties.
Principal investigators
Asaf Bernstein; Ryan Lewis
Funding
University of Colorado Boulder
Collaboration + support
Leeds School of Business; National Oceanic and Atmospheric Administration; Penn State University; Zillow