Rising tides can sink property values
Perception can affect real-world markets through the curious pricing of beach properties.
Leeds School of Business assistant professors Asaf Bernstein and Ryan Lewis researched thousands of land parcel sales.
Properties exposed to sea-level rise sold for an average of 7 percent less than comparable properties that were not exposed.
Originally published Aug. 22, 2018
A potential rise in sea level affects how much home buyers are willing to spend, according to research by two assistant professors at ֱ Boulder’s Leeds School of Business.
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 properties exposed to sea-level rise sold for an average of 7 percent less than comparable properties that were not exposed.
Why the discount? Buyers, especially “sophisticated buyers” purchasing properties as investments, appear to factor sea-level rise exposure into their valuation of coastal properties.