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.
Universities, climate research groups and the National Oceanic and Atmospheric Administration have made dire predictions about sea-level rise in Miami — the ocean overtaking vast swaths of real estate over the coming decades. So-called “nuisance” flooding, when king tides come in on sunny days, is already common in some neighborhoods.
That, argues Keenan, is why wealthier investors are now displacing low-income residents in high-elevation neighborhoods, like Little Haiti.