Recently, I've been thinking more about how climate change may positively or negatively affect real estate values. With seemingly more fires and longer droughts here in California, I've begun to think more strategically about where to buy real estate.
If you are planning on investing in real estate and passing down your real estate holdings to your children, then it's worth thinking about how climate change may affect real estate values in the future.
I realized the other day that every single one of my properties is on a hill. I didn't purposefully go out and hunt for properties on a hill. It just happened that way. I love views, especially ocean views because it provides a calming effect.
The only property I owned that wasn't on a hill was sold in 2017. Maybe subconsciously, the reason for the sale wasn't due to the hassle of being a landlord. It was because I felt uncomfortable being so close to sea level. Or perhaps it was due to my dislike of facing another building.
When your own property on a hill, you aren’t affected by flooding. But there are lines slide risks to be aware of.
Owning Real Estate With Good Feng Shui
As a real estate enthusiastic, one of my main criteria for owning property is that it must have good feng shui. And one aspect of good feng shui is having a pleasant view. When you enter a property, you can just feel the positive or negative feng shui. A lot of the feel has to do with light, direction, sound, and layout.
Besides, having a view gives a property a unique competitive advantage. Views make properties more desirable. And the more unique and desirable the property, the better it will hold its value or appreciate over time.
Given it's human nature to want what you can't have, I decided to set my sights on acquiring a beachfront or close to beachfront property in Hawaii for my ultimate retirement home.
I dreamed of being able to step onto my ocean-facing deck and feel the sea breeze on my face every morning. While doing my morning stretches, I wanted to smell the ocean, especially now that rolling lockdowns will likely become the norm.
In my search, I found a couple of “affordable” beachfront properties in Honolulu that needed remodeling. Then I was reminded by readers, my father, and by several natural disasters that perhaps owning a beachfront property is not a great idea long-term.
Let's take a glimpse at how climate change affects real estate investing.
How Climate Change Affects Real Estate Investing
One of the main, multi-decade investment trends I'm investing in is real estate in the heartland of America. I've put my money where my mouth is and have invested $810,000 in various commercial real estate projects since 2016.
Besides the growing trend towards remote work thanks to technology, what I now realize is that climate change could also provide a positive catalyst for my investment thesis.
According to a study published in PLOS One in January 2020, as many as 13 million people in the United States could be forced to move inland by 2100.
Take a look at this map of the United States showing the areas most affected by rising sea levels (blue).
Map Of Rising Sea Levels Due To Climate Change
The cities the researchers say will benefit the most by 2100 from “climate refugees” include: Atlanta, Houston, Dallas, Denver, and Las Vegas. But I'm not so sure about Houston since it has its own flooding issues.
Related: The Best Cities To Buy Real Estate In The New Decade
One thing you might notice on the map is that the migration inland isn't very far. When I think of the heartland, I'm thinking of the center of America. Now I realize I need to expand my definition and my search for heartland real estate investments.
The areas that benefit the most (darker red) are still relatively near the coasts. The areas that won't be seeing much benefit (white) are more in the central west and central north parts of the country. So one has to really pick and choose which cities may truly benefit the most.
Since most of us will be dead by 2100, climate change isn't an immediate issue. However, for those of you considering investing in real estate for your children and your grandchildren, climate change is worth paying attention to.
It seems that if the climate researchers were to model out an additional 100+ years, there would be an even larger number of migrants and a deeper penetration inland.
Rising Sea Levels: From Beachfront To Ocean View
Based on my growing concern of flooding, I've decided to give up my goal of one day owning a beachfront home or close to the beach home in Hawaii.
I've carefully followed the luxury property market in Honolulu since 2014. It is clear to me that once you get in, it is VERY difficult to get out. Homes priced above $3 million tend to sit for at least 6 months. I've followed a handful of homes that were listed in 2016 that still have not sold.
Instead, it is much better to rent a beachfront home and not take on any natural disaster risk. With the money saved from the downpayment, it's better to invest in lower-cost areas using my BURL methodology. I could use inland real estate investment income to more than pay for the Hawaii beach home rent.
Ocean View Properties Are Better Than Beachfront Properties
The alternative is to do what I didn't realize I've been doing since 2003. Buy view properties in the hills. I like the seclusion of the hills. It's so much less densely populated up here too. Although I won't be able to smell the sea breeze, viewing the sea may prove to be just as comforting.
From a long-term investment perspective, due to the concern of rising sea levels, it seems reasonable to assume that at some point, oceanfront homes will underperform and ocean view homes in the hills will outperform the general real estate market.
Thus, the ultimate question becomes: how will ocean view real estate compare to heartland real estate? The answer will likely depend on job growth opportunities and migration trends.
For me, I've decided to invest in both markets because I believe both will do quite well.
Climate change will affect real estate more significantly in the future. But for today, it’s best to invest in the property and area that provides you the most joy.
Key Points About Climate Change
- If you own property on flat lands in the blue areas of the map above, your property may be at greater risk of flooding in the future. Properties at greater risk of flooding may require flood insurance and may lose value or underperform compared to property in the hills.
- For those of you who want to buy property in a flood zone, it's worth negotiating more aggressively to take into consideration future risk. At least check the annual flood insurance cost before buying.
- Property in the hills may be exposed to fire risk if there are a lot of surrounding trees. Therefore, inquire about fire insurance as well. Make sure property in the hills have a solid foundation.
- Climate change is not an immediate reason to invest in heartland real estate, demographic trends are. However, by 2100, perhaps climate change will have a more significant impact on real estate values.
- Buy a home with good feng shui. It'll make you feel happier every time you come home. A home with good feng shui will also better retain its value.
If you're looking to get a competitive home insurance quote, check out Policygenius. You just have to fill out one application and you'll get home insurance carriers to compete for your business.
How Climate Change Will Affect Real Estate Values
In conclusion, here is how I think climate change will affect real estate values.
How Climate Change Affects Beachfront Property Values
If you own beachfront property, I believe climate change will negatively affect your real estate value the most. Climate change will reduce beachfront property values by negative 0.5% – 1% a year. In Oahu, some beachfront properties lose about a foot of land a year to rising seal levels.
How Climate Change Affects View Property Values
Climate change will positively affect view properties. More people will move up to higher grounds to escape flooding risk. Therefore, climate change can boost view property real estate values by 0.5% – 1% a year. The view property needs to be on elevated grounds.
How Climate Change Affects City Property Values
Due to the threats of fires, more people will move to cities with better water and safety infrastructure and less greenery. Therefore, city property should increase in value due to climate change. City property might see a 0.25% annual boost to property values.
How Climate Change Affects Suburban Property Values
Finally, properties in the suburbs or in the deep woods could see a slowing in property values due to climate change. As more people move out of fire-prone areas, property values may decline. As a result, suburban properties will be negatively affected by climate change with perhaps a 0.25% annual negative drag.
Be A Strategic Real Estate Investor
It's nice to live the good life by buying ocean view or beachfront property that gives you joy, regardless of climate change. At the same time, it's worth strategically investing in real estate for solid income and greater returns.
Check out Fundrise and their private real estate funds as a way to earn earn more stable income and returns. The income is completely passive and there is much less concentration risk. Fundrise is my favorite real estate platform. It is vertically integrated and invests primarily in single-family and multi-family rental properties in the Sunbelt where valuations are lower and yields are higher.
If you are bullish on the demographic shift towards lower-cost areas, also check out CrowdStreet. CrowdStreet focuses on individual commercial real estate opportunities in 18-hour cities. CrowdStreet mostly offers individual real estate investment opportunities. Just make sure you carefully vetted each sponsor before making any individual investment.
You can use the higher income from your real estate investment portfolio to pay for your beachfront or ocean view property expenses. Invest in real estate to personally enjoy and invest in real estate to earn.
Readers, do you think climate change will negatively affect coastal real estate? Would you invest your money on ocean view real estate or heartland real estate? Do you think oceanfront property will underperform or lose value over time?
Property that’s on the ocean or very close to the ocean (less than 500 feet) where you can smell it and see it clearly BUT is elevated in the 100-150 foot range will be the most valuable real estate in the world. Some homes on cliff sides on the beach that are considered safe from climate change are elevated 30-50 feet but those will get destroyed by the salt spray from the ocean. Stay at 100 feet and you will avoid most of the damage caused by sea spray. But stay under 150 feet to get the most amazing view plane of the ocean. Buy these 100-150 foot range Goldilocks ocean view properties which are close enough to smell the ocean and you will be rewarded in spades in the very long term (20+ years).
You beat me to the punch Sam! Sorta!
I’ve been thinking about the long term effects of climate change relative to real estate for a couple years — the headline quietly sitting in my iphone notes for just as long. My article will have a different slant, more philosophical and broad, reaching beyond real estate.
Regarding your ending questions: Yes! Climate change will absolutely adversely effect ocean front property values (time frame undetermined). Even before being submerged, folks will tire of dealing with earthquakes, hurricanes, and flooding and will migrate inland. Those of us with currently perceived “bad” weather will eventually have desirable locales for security and safety, in more ways than one!
Great article Sam.
We are very lucky where I live in the UK that forest fires, floods or anything like that doesn’t really go on so therefore should not affect our real estate values.
Sea side town and villages close to rivers, this may be another thing all together.
Stay safe!
Josh
Just last year we moved from the northeast to a beachfront home on the gulf side of Florida (located in the blue area of the map). We’re aware of all the risks but at 50 years old after 30 years of grinding in a difficult business I’m retired and can’t imagine living anywhere else. If 20 years from now I have to sell and only recover half what I paid it will still be worth it. We’re healthy and active and have a teenage son who will also be able to enjoy the next 20 years here and possibly our grandchildren. I feel that experience may bring more joy than any loss in their inheritance a decline in value may bring but then again I won’t be around to know any better. We’ve bought and sold several vacation properties in the last 25 years but my wife and I both agree we wouldn’t sell our current home for twice what we paid we enjoy it that much.
Liked the Podcast, thanks.
I live in AZ. When the big one hits and CA fall off into the ocean, it will be beachfront property at a bargain-basement price ;)
Awesome! I’ve been hearing about this from out of state folks who can’t afford to live in California for years.
Life is too short to live in Arizona my man!
“Don’t knock it ’till you’ve tried it.” I’ve lived in the Carolinas, Florida, CT, Southern NJ, EastBay/SF, and Wisconsin and, by far, prefer Arizona to any other place. I enjoyed the other places too as they each had their strengths but AZ has become our true home.
Now if we could just keep all the liberal Californias who screwed up their own state from migrating to AZ and changing our politics, it would be perfect ;)
I agree! Life is too short to live in Arizona. Arizona is cheap for a reason!
Yes, and the reason is because we actually know how to manage a balanced budget and stick to it.
Just like our current president!
Ouch!…Feel the burn..haha
A bit of an over-reaction but hey, its kind of hard to translate everything correctly over the internet. No harm, no foul.
It’s all humor. I live in one of the most left leaning parts of the country. I am a conservative and can find humor in anything.
Amen Brother!
Just wish all people could find humor in more things. It takes more energy to get upset and stress over stupid things than to laugh. But that is our society today. Everyone wants and needs a trophy. We need the old school leadership who just agreed to disagree. Both sides are being petty and childish. Our country and all citizens deserve it. I spent close to 28 years in the U.S.Army and have seen it all and then some. I’m Glad you can see the humor, wish all could.
Big Sarge, I agree with you. We have become an entitlement society and have forgotten the art of compromise. Everyone hones in on their own viewpoint and locks into their position leaving no room to find the middle ground. We’d rather shout insults at each other than look for a point of understanding and agreement. Instead of the platform, we focus on the politician. They want everyone to lose if they can’t win. There will be an ugly day of reckoning where everyone pays the price for this pettiness. Another reason to achieve FI and be prepared for the worst when it comes.
And by the way, Sarge, thank you for your service!
Totally agree w/you as well! Both the left and right need to grow up!
The problem with Arizona is that it is already too hot in the population is very homogenous. Not good if we are talking about climate change.
Also, more than 10% of Arizona’s COVID tests reported today came back positive.
New York is down to around 1%.
That should be concerning.
They’re one of the top states for number of cases so they have that going for them!
‘But they’re doing more testing’! And they’re leading the nation in test positivity rate at 15% vs CA at 5% (not great either).
I think we have the exact same habits when it comes to following real estate. As we travel the world and find places we love as we sail or walk by, the first thing I do when I get home is check the listings. Yep, you are spot on with the higher priced stuff, it sits forever. Places on St. John in the USVI still asking the same price 6 years later. Kauai, Playa Langosta, Elbow Cay, The Big Island, Maui, BVI’s, all the same. If you buy you better love it, or have gotten a hell of a deal.
Now that being said, you have mentioned a zillion times that tomorrow isn’t guaranteed so I certainly would not forego the pleasure of living steps from the beach because your kids grandkids will watch the place slip into the ocean where you created so many amazing memories over your life. Get busy living!
The other big issue with Living right on the beach is the salt spray destroys everything. You’re constantly need to be getting new TVs, appliances, cars, electrical wiring, everything. We lived in a beach front-ish place for a month and Oahu and it was nice being a renter and not the one responsible for all that maintenance.
You have lived in blue state too long. Your brained washed. You need to move to a red state to live. All your views will change.
Feel free to elaborate on how living in a red state will change my view on climate change.
I do have over $500,000 in investments in red states. It was over $800,000 at one point but some deals paid out.
I do think people in blue states should buy up as much red state property with good job growth and positive demographic trends as possible.
See: https://www.financialsamurai.com/focus-on-investment-trends-why-im-investing-in-the-heartland-of-america/
If you move to a red state, the coronavirus will instantly be cured as well!
Right on! Good to know. That would surely boost Red state real estate prices if so.
Someone also mentioned that protestors will also be immune to the coronavirus. But I find that hard to be true.
I would go for the beachfront home and live the dream. Sure, bad things could happen but it comes down to the level of risk and how those risks can be mitigated. Climate change happens over a long period of time, so homeowners can keep tabs on the “loss” of their beachfront over the years and sell before it gets too bad. Flood insurance would address flooding issues if a rare tsunami were to hit land. Renters are at the mercy of the landlord to grant them permission to continue living in a home. What if you and your family fell in love with your rental home and had to move unexpectedly because the landlord had other plans for the property? Also, the landlord is free to raise the rent as much as he/she wants. I think that if you asked the average person reasons for why they wouldn’t want to purchase oceanfront property, it wouldn’t be because of climate change, so this means there are likely plenty of people willing to purchase oceanfront to live their dream. Oceanfront will always be someone’s dream home. With oceanfront properties in limited supply this will keep the price and demand up. Now, I don’t know why luxury homes above $3M aren’t selling in HI but maybe the key is to purchase in a price range that would be more desirable for resell. Since you’ve been keeping tabs on properties that have been on the market for years, maybe the owners would be more willing to negotiate on the price. Good luck with finding your dream home!
I was waiting to see this article for some times now. Finally you wrote it, thank you! I have the same thoughts about how sea level rise will affect the property value in coastal areas, not to mention other impact of climate change on the intensity of hurricanes, flooding, drought etc. I think buy lake front property in higher land is the better bet than beach front property in low flat land, we can always rent beach front property to enjoy it but not have to deal with the risk of owning it.
I think Manhattan has to face increasing climate change risk and also demographic risk. Chicago in the long run may benefit from the climate change trend because the city has all the infrastructure in place, sit on high land with lake front and direct access to fresh water.
A great way to have your ocean front view with minimal ocean level risk – buy/rent a boat!! A little smaller but beautiful views and no issue if the ocean is higher. :)
Hah! Nice. But to buy a 3,000 sqft yacht sounds like it will cost me Tens of millions.
House on land is cheaper!
Now you finally hit a top close to my heart! This is my thesis on my blog, all the money in the world is not going to make a difference if we don’t mitigate climate change. I still invest wisely and are networth is in very good range. But we have cut our consumerism life style dramatically and donating targeted to the Rainforest Trust and highyield environmental organizations. No money in the world is going to make a difference if we don’t stop climate change. A great book is Drawndown by Hawken. I really think the personal finance bloggers out there are so smart and now the value of a dollar, and can be good advocates for climate politices that a COST EFFECTIVE. It drives me crazy that some of my environmental friends will buy a $20 bracelet from some scam environmental organization and not check out Charity Navigator where they could donate it to Rainforest trust and save 20 acres of rainforest. I’ve had patients just offer to donate to my blog! I told them they are crazy. my blog is just for fun. Anyway, I hope more personal finance bloggers help with the climate movement. It is seriously scary. I’ve thought about moving to somewhere more climate resilient than so cal, but I figure my roots are so deep in my hometown that I’d rather take the chances here where I have a community that I care for and I think people care for me. God bless us all!!!!
Good points are made in this post in regards to multi-generation real estate inheritance
I am processing numerous changes that will probably occur due to the Coronavirus. How many people are going to leave high cost markets for middle America after this?
Things to think about when investing in real estate….
I remember talking to a guy once who said he will always live on hills. He joked how he doesn’t like people and living on a hill is a great deterrent. Guess it’s also a good way to be protected from flooding!
It will be interesting to see what happens to the coasts and climate change in the coming decades. All the lockdowns around the world have at least drastically reduced emissions and pollution for months.
Liquefaction zones are a bigger issue in SF compared to whatever models the climate changes predict. Personally, I’m not sold on the models because they are never as accurate as the scientist of the day wants you to believe
Hi Sam,
I wanted to get your and anyone else’s opinion on Florida Real Estate over the next 30-40 years. I’m attending dental school starting next year and would like to practice and raise my family in North Florida, but understand that at some point closely after that we will most likely have to move somewhere else. Do you think that 40 years is enough time to raise a family, save for retirement, and get out? Or should I start looking for opportunities in safer areas now? Thanks again for all your work, I’ve been following your work since Financial Samurai first started and have enjoyed keeping up with your financial journey.
Don’t do it! The climate change models (like the covid models) say it’s bad news. Stay away from costal real estate – I want to keep prices low while I am buying. :)
Now, now. The government COVID-19 model was only off by about 99%, at least here in a California.
We gotta look on the bright side of things!
I love the idea of ocean view with a short walk to the ocean. Water has a calming affect on me, but losing my house every couple of years sounds miserable. Good friend lived for 4 years in Florida, and lost the bottom floor of his house twice to hurricanes. His dream of living next to the ocean has been permanently removed. Also the only company that would insure his house was a state of Florida backed insurance company and his premiums were 10 times more expensive than his next home. Go find that house close to the ocean, but zero chance of it flooding!
I’m not a climate change denier. If you spend time in Alaska you can really see the drastic effects that climate change is having. I am skeptical on how much effect humans are having on climate change versus just the natural ebb and flow of our universe.
I do have the utmost confidence that 50 years from now science and technology will develop to such an extent that we could eliminate any negative effects humans are having on the planet. Look where we’ve come technology wise in the last 50 years. It’s unbelievable!!
With all that being said, I wouldn’t forgo a dream of having oceanfront property. It’s impossible to predict that far out in the future. Look how the world has changed just in the last 4 months.
Thanks, Bill
Yes, hopefully with autonomous driving around the corner coupled with electric vehicles, our carbon footprint would be drastically reduced.
I think that’s just the beginning. Growing up I remember when the microwave oven came out, than the Betamax vcr, than cable! I’m 49 years old and when I was a kid there were only 4 tv channels available. Then cellphones, then the internet. Now we have AI, and machine learning!!
The next 20 years are going to be amazing. I picture roof shingles that are all solar, Houses that are smarter than us. Airplanes that don’t burn carbon fuel. Gravity driven mass transit. Who knows?
Even with a pandemic, social unrest, the deep divide, and riots I’ve never been more bullish on this country’s future. I can hardly wait to see what happens!
I appreciate this post. Made me think were we’ve come and were we could possibly go. Thank you Sam.
Don’t forget that climate change moves in both directions throughout eternity.
In a recorded lecture, one physics professor told us, “Man’s ability to change or retard climate doesn’t exist. Only his ego makes him think he has that power. Who would get to set this theoretical thermostat, anyway? Siberia or Africa? Carbon’s absorbable. Don’t waste money shoveling sand against the tide. In summary, It’s the sun, stupid!”
Nonetheless, as someone who has stared at a neighbors wall for 10 years, I love the requirement of feng shui. I will start looking for a new home with a view.
Love it! And so true.
Climate change may just be a marketing tool for buying and selling property in the short term. But it’s good to consider in the long term given that there is an expense related to flood insurance and so far.
I will absolutely say that having a view Is wonderful. It improves your mood, it increases your optimism, and it makes you happier.
Those things are worth a lot.
I think renting a beachfront property is a better option as well. Repair and maintenance is more expensive with all that salty spray/mist. Having an ocean view is enough. You can always drive to the beach, right?
From the map, it looks like the east coast will have a lot more problems than the west coast. Particularly, Florida looks like it will lose a ton of land.
Good luck with your property search.
Yep, driving To the beach is easier. But man, it sure is nice to just walk to the beach.
You worked in Finance, so I would like your opinion on a couple of things…
– Why haven’t insurance companies stopped insuring all the property in the blue area, or make it prohibitive to have a home there? Please don’t say “I’m smarter than all of the people at those companies that consider insuring those properties at reasonable rates a good return on investment.”
– Do you think cities in those areas should write in their municipal bonds something like “We think climate change will happen, and therefore will probably lose our tax base making it impossible to pay back long term bonds.” Even the bluest of cities won’t do this. Are they deniers if they don’t do this?
– Or, is it fair to conclude, as someone with strong financial sense, that responsible professionals will seek out the unpopular opinions too and try to make clear judgments? That is what I have heard finance professionals try to do. I’m not talking about you, I am talking about all the underwriters and analysts at city governments and insurance companies.
The reality on the ground just doesn’t line up with the graphs when it comes to things like this, and I’d just like your opinion on that,
What makes you think that insurance companies plan or think beyond the next few quarters?
Sea levels are a multi decade phenomenon. Even if there was imminent danger of mass insurance claims, big companies can safely rely on a taxpayer bailout. So they can safely keep underwriting risky properties.
>What makes you think that insurance companies plan or think beyond the next few quarters?
I think the people that have their capital tied up in insurance companies care about more than the next few quarters.
>Sea levels are a multi decade phenomenon.
If someone is predicting that water will be 100 miles inland on all the coastline of the US in 80 years, only a fool would conclude it will all happen on year 79. Surely it will be .5, 1, or 5 miles inland pretty soon. Soon enough for municipals to have a fiduciary duty to highlight the threat of population loss, and for Muni investors (like Financial Samurai notes on his passive income chart) to demand extra compensation for the risk they believe is coming. Smart people don’t skip these things when it comes to their money, so I am wondering how professional investors sort all this out.
As an actuary at a major insurance company, I can tell you most don’t really insure those properties from flood. At least not the primary layer (many companies write excess layers).
Insurance companies sell flood insurance, but almost all flood insurance is actually fully covered by the NFIP (National Flood Insurance Program). It’s a government program that subsidizes people’s ability to live in areas that are guaranteed to flood.
If private insurance companies wrote and paid claims for flood insurance, the premiums would be enormous and no one would buy it. Hence, the. Government steps in and offers it as a loss, but has private companies sell it for them so that they don’t need to build out an agency structure.
DL, that’s exactly why I sold my oceanfront place in Delaware last year. In the near term I wasn’t as worried about climate change or the physical damage of a storm or flood. My bigger concern was what would happen if a major bank announced they were no longer writing mortgages in these areas and others followed or if an insurer (casualty, not flood) decided they would not write policies in these areas and then others followed not only driving prices up tremendously but also contributing to the mindset that purchases in these areas is a bad idea. Appears we may already be heading in that direction given Sam’s decisions to abandon the dream of an oceanfront place in Hawaii!
Sure. It’s because climate change is slow and takes time. There is a point of living today versus living tomorrow which is uncertain.
What are your thoughts about the subject and what is your background?
It’s more than just sea level. Drought, flooding, extreme weather. Patterns get multiplied in climate change.
An example is we were considering a move from the Bay Area to Austin. Austin is much warmer, and wetter, but what nixed it for me was the long term trending around days over 100 and days over 90, which if I recall was 43 days over 100 by 2050. No way for me, as much as I like Austin.
Bay Area trend is forecasted to be drier, more like southern CA. Not so bad weather, not great for Tahoe though. Drought and fire will be the main impacts here. As for sea level, I wouldn’t buy in Alviso, but I’m fine with San Jose.
projects.sfchronicle.com/2019/climate-questions/
usgs.gov/faqs/what-are-long-term-effects-climate-change-1?
If the world gets warmer, then San Francisco will get more valuable. We average around 62 to 64°. Then we can start averaging 66 to 70° year around, I am pretty sure that tons more people will want to buy property here.
San Francisco will become like San Diego, but with more employment opportunity and more beautiful scenery culture food and so forth.
We are already seeing how it’s become less foggy towards the ocean. Therefore, properties on the west side of San Francisco are continuing to outperform in price appreciation.
Here in Southwest MI the prime real estate is on Lake Michigan. On average this adds around $500K to the price tag of the home. In 2011 lake levels were at an all time low and homeowners on the lake got a bit extra beach. For the past 5 years there has been a significant rising trend, with it looking like the Lake will hit all time highs this summer. Beaches have disappeared with the water right up to the bluff in many areas. Erosion at several locations in my county is happening extremely fast. People are losing significant chunks of their land. Some are moving their homes back away from the edge, while others have lost their entire property. Multiple homes in my county have been demolished because its cheaper than cleaning up the mess after they fall down the bluff. I’ve always thought about buying a house on the Lake once we are FI, but I’ve now reconsidered.
What percentage increase is $500,000?
It’s hard to gauge, maybe you could analyze the market much better than me. (Berrien County; Benton Harbor, MI) The problem is the vast majority of houses on the lake are much larger/nicer than houses not on the lake, so its hard to comp. Roughly 300%-400% markup is my best guess, A $250K house not on the lake would be around $750K to $1M on the lake, but most houses on the lake are much pricier houses than the average off the lake.
We actually bought one of the condos right in front of the Ala Moana Beach Park. It was one of the best decisions we made, particularly in light of the recent lockdown. Not sure if you are familiar with the Ward Village area, but the benefit of being within walking distance to everything including the beach, is wonderful. Also not sure what impact covid19 will have on this part of real estate and investment, but it’s definitely worth keeping your eyes on it for the right price (like you said in your previous post, all it takes is just that one desperate seller). Hawaii has so much more to offer than its rainbows. The aloha spirit goes a long way especially during today’s social turmoils. I’m grateful our kids are growing up surrounded by island charm with opportunities to travel. All this is worth living for the moment despite the high cost of living in Hawaii. Hope you don’t have to give up your Hawaii dream!
Being able to view the beach and walk to the beach is wonderful!
There is some thing that I’ve been dreaming about for a while now. And I think I’ll be able to make my dreams come true, but I might have to walk farther than expected to get out of the flood zone.
You’ll be alright on the sand or a little back. We moved from oceanfront to 6 blocks away from the beach about 5 years ago (literally one block west and 6 blocks north from our previous residence). A short walk and all is the same, but definitely get the view; I do miss the view.
As far as investing money in different locations? I have no concern putting money into coastal areas in a home I would live in (for personal enjoyment and preference), but all the anecdotal evidence I have says heartland investing (i.e. rentals, etc.) is a better investment in middle America.
My Dad said it years ago, “people want to live by the beach.” My parents bought a condo in ’98 for $185k, I bought it from them for $775 in ’11 and sold it for $919k in 15′. He was right the last 20 years, and I would imagine the same to be true the next 20, even with climate change. So I don’t think you’re going to lose if you change your mind down the road.
I absolutely encourage you to move to Hawaii–the place is unreal, as you undoubtedly know and climate change is both cyclical and gradual. And considering your self-employed freedom, I would jump at the opportunity while the kids are still young. (If I weren’t as dependent on my current job, I would be right behind you. Another 8-10 years and I might actually be next to you–not on the same island, but very nearby.)