What Mother Nature Has to Say About Property Values Land valuation calculations get more complex as the pace and severity of natural disasters intensify.
What to make of the location of building lots and their relative susceptibility to weather and disaster events, and the fact that the frequency of these events seems to be accelerating?
One study uses evidence that disaster risk has begun to determine winners and losers in real estate value.
Another deep analysis of data, human behavior, and land values reaches an almost opposite conclusion–indicating that people are still anteing up top-dollar for residential sites even if the known disaster risk is high in those locations.
What does this mean when it comes to land strategy in an environment where it already takes too long to bring land parcels online for vertical development, and where entitlement risk already ranks as a big red flag for forward-modeling of business activity?
Yesterday, a CNBC report from correspondents Diana Olick and Erica Posse focused on work being done by Harvard’s Jesse Keenan, which observes that those with wherewithal are literally gravitating toward a “high-ground” in real estate, versus lower-elevation coastal areas considered to be more flood prone. Olick and Posse write:
“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.