In South Florida, top considerations for choosing a new home have shifted, thanks to climate change.
“Before it was location, location, location. Now, it’s about elevation, elevation, elevation. The new buyer has to worry about both,” said George Jalil, broker and president at Miami Way Realty.
Sea level rise doesn’t top the list of buyer or seller concerns in South Florida — especially if you’re rich enough to afford the ever-skyrocketing costs of waterfront property — but for budget-conscious buyers, choosing the wrong home could have expensive consequences.
In the 30-year lifespan of a typical mortgage, some parts of South Florida could start to see floodwaters regularly soak their streets, yards or even their homes. Local governments are planning on more than a foot of sea level rise by 2050, and Miami alone could see high-tide flooding about 150 times a year by then, according to a NOAA analysis. A report from consulting firm McKinsey found concern about sea rise could send Florida real estate prices tumbling as much as 15% this decade, years before floodwaters even touch doorsteps.
After years of stiff-arming the issue of climate change, South Florida real estate professionals have finally begun talking to buyers about their concerns with the rising sea and flooding, according to Jalil. “Folks that are looking to relocate to South Florida have more questions [about sea level rise and flooding] than the local people.”
Realtors suggest flood insurance, technology to keep floodwaters out and above all — looking for a home on high ground.
The concept of “flood-safe” neighborhoods for ownership is a fraught one, but five Miami-Dade Realtors, insurance and flooding experts interviewed by the Miami Herald recommend these strategies for choosing a home.
LOCATION, LOCATION, LOCATION
For most buyers, budget determines neighborhood. When they factor in commuting time, schools, places of worship and proximity to family, options narrow considerably. Adding heightened elevation shortens the list further.
From a climate standpoint, environmental consultant Albert Slap said he doesn’t consider any neighborhood in South Florida a universally “bad” or “good” place to buy a home.
“It’s not about doom and gloom, it’s about what is right for a particular family, company, whatever,” said Slap, president of Coastal Risk Consulting. A buyer’s appetite for buying a house in a flood-prone area can depend on multiple variables: how long he or she plans to live there, whether they can afford flood insurance or if they have a safety net to fall back on if a hurricane or flood destroys the home.
“Is this someone who is investing all of their equity into this home? Or is this someone who doesn’t care?” Slap said. “You see celebrities on Star Island spending $20 million on properties that aren’t going to last 30 years; they just aren’t. There’s a lot of people in Miami and South Florida who have got so much money they just don’t care.”
Part of that calculation is deciding how much flooding you’re willing to tolerate, even outside of your property line. While a home can be elevated and safe from floods, nearby roads could be swamped in a strong rainstorm. Or the local soccer field could go soggy in a king tide.
As Slap puts it, “You don’t wanna buy a castle with a moat around it.”
On a map, Miami-Dade is bordered by blue — indicating water — to the east and south. When sea rise is factored in, the blue invades, surging the banks of rivers and canals, pushing the shoreline inland and even seeping in from the Everglades side.
A review of two popular climate change mapping services — Climate Central’s Surging Seas and First Street Foundation’s Flood Factor — reveals a few areas of high elevation. Most of it is clustered around the coastal ridge, a spine of higher ground that cuts through the center of the county. It’s where Henry Flagler built his railroad, and in many places, it’s about a dozen feet above sea level, far above the county average of seven feet.
Based on those maps and market trends, a panel of two local Realtors and an insurance expert created a list neighborhoods they would recommend to clients. Allapattah, Coral Gables, Homestead, Pinecrest, South Miami and Wynwood were tops. The panel included Jalil, Keyes Company CEO Mike Pappas and JAG Insurance Group Partner Luis Gazitua.
Some activists and residents warn that as the tide turns on what kind of land is most desired, it could lead to a phenomenon called climate gentrification that pushes up values beyond the means of lower-income residents.
For buyers on a budget, Homestead should be “ground zero,” Pappas said. “The best value is Homestead,” he said, highlighting how buyers can still find fincas, or ranches, and relatively large homes compared to other neighborhoods on the list.
First-time home buyers already know the city. Homestead ZIP code 33033 had the most single-family home sales below $400,000 from the first quarter through the third quarters of 2020, according to data provided by the Miami Association of Realtors.
Prices in Homestead typically fall 29% below the county’s median sales price for a house of $450,000, according to the latest Miami Association of Realtors sales report. As of May 2021, the median sales price of a house in Homestead was $350,000, according to Multiple Listing Service sales data.
“Homestead is very good,” Jalil said, “because you have a balance of non-flood areas combined with well-priced homes.”
Allapattah is an even bigger bargain, with sales prices 32% below the county median, at $340,000 according to Realtor.com.
Buyers with more generous budgets may opt for Coral Gables, Pinecrest or South Miami, Pappas said. Average prices are much higher, with a median sales price of $1.1 million in Coral Gables, $1.4 million in Pinecrest and $884,000 in South Miami, according to MLS sales data from April 2021.
Most climate change experts see Miami-Dade real estate as a declining proposition. But that risk doesn’t kick in for most properties for a while.
Only a small fraction of South Florida properties are at risk from serious, permanent inundation in the next 30 years. Flood Factor’s Flood Risk Explorer Miami map shows that by 2051, 8,045 buildings have a 20% chance of flooding. Of those buildings, 60% face a chance of seeing one to four feet of flooding, which could be devastating.
While there’s uncertainly over the timing, current models from international climate scientists and local experts show the problem is forecast to get worse. At six feet, the amount expected by the end of the century, there’s very little dry land left.
“I would be very cautious about purchasing property in South Florida because of sea level rise,” said Kristina Dahl, a senior climate scientist from the Union of Concerned Scientists. “That said, that hasn’t slowed the real estate scene down in South Florida.”
Buyers and Realtors clearly don’t see an issue. Sales and property values have continued to skyrocket over the past year, rising to an all-time median high of $490,000.
Still, one Harvard study found that single-family homeowners are starting to pay more for high elevation properties in Miami-Dade, a sign that those homes are becoming more valuable. Another study from Columbia University suggests the threat of flooding is holding down coastal home prices from rising as high as they could.
A recent Realtor.com study showed that between 2014 and 2019, sales price per square foot grew about 52% for Miami-Dade single-family homes, condominiums and townhomes at low risk of flooding. Homes with the highest flood risk, researchers found, only grew 5% in value over that same time frame — the most dramatic disparity of the 78 counties included in the study.
Danielle Hale, chief economist for Realtor.com, said the company recently introduced data on flood risk for every parcel on the site through a partnership with Flood Factor because buyers were asking for more information on flood risk.
“It’s important for home buyers to be aware of that among all the other things,” she said. “Especially in an area like Miami where you have lots of properties that are more obviously at risk because they’re close to waterfront.”
Still, Realtors say they receive few questions regarding flooding during the home shopping process.
“People are more interested in having impact windows and protection against hurricanes, said the Miami Realtors Association’s Wollmann. “The last buyer that brought up flooding was from Boston and it was five years ago.”
The top three concerns for buyers — and local Realtors — include first-time homebuyer assistance programs, condominium home owner’s association issues and condominium financing, according to a Miami Association of Realtors 2021 Advocacy Survey, which surveyed nearly 1,200 members. Resiliency ranked 14th out of 20 concerns.
“Years ago you never heard these questions,” Pappas said. “People are more educated and concerned, but we don’t see it being a limiting factor.”
GUIDE TO DETERMINING YOUR RISK
Once you’ve settled on a neighborhood, the next step is figuring out what the flood risk looks like for the homes you’re interested in.
What seems like the easiest step, identifying if a property has flooded in the past, can be difficult. There’s no law forcing sellers to reveal past floods on a property, unlike with sinkholes or lead paint. Florida is one of a handful of states that don’t require flood disclosure, although there is an option to voluntarily reveal that information on a disclosure form.
As for future floods, most buyers assume they can get all the information they need from a FEMA flood map, which determines whether or not someone is in a zone that requires flood insurance. But that isn’t the case.
Experts say the maps are often outdated and incorrect, and for now, FEMA doesn’t take rainfall or tidal flooding into account for flood insurance, so the annual price of a policy doesn’t reflect the real cost of protecting the property. That’s changing soon, but it still won’t tell the whole story. Nor do the maps that model how much sea level rise a community could see.
Free tools, like MyFloodRisk.org or FloodFactor.com, can give a better sense of whether one end of a neighborhood faces more flooding than another. Some products allow the user to customize the information by inputting information like first-floor elevation or how many stories the home is, something the free services don’t automatically realize.
Knowing things like how high your first floor is, or how high the neighboring properties and streets are can make a difference, said Slap, president of Coastal Risk Consulting. His firm is one of several on the market that offers customers a personalized flood risk assessment to help them make informed decisions before buying a home.
Other companies that offer similar services are Jupiter, a Silicon Valley startup, and consulting firms like AECOM, but those are geared more toward companies and cities.
Slap recommends that buyers look into what their future cities are doing to address sea level rise and flooding before they decide where to buy. Some places, like Miami and Miami Beach, are spending hundreds of millions to protect the soggiest corners of their cities in the next decade, while others have no plans.
Dahl, the scientist, agrees that it’s important for residents to find out what their cities are up to on the flooding front, but warns that those costs could eventually wind up on the homeowner’s tab.
“It’s also important to bear in mind that there is a limit to our ability to adapt our way out of this, and those local measures can potentially buy us some time, but they’re costly and a lot of that cost is borne by taxes on residents,” she said.
INSIGHT ON FLOOD INSURANCE
Flood insurance is a must, said Gazitua of JAG Insurance Group, and should not be confused with homeowner’s insurance, which covers water damage and leaks due to hurricanes but not sea level rise or flooding.
“You would be surprised that some areas that are not in flood zones have flooding issues,” Gazitua said. “The assumption is that the farther you are from the ocean, the safer you are from flooding, but the truth is that there are some pockets in neighborhoods that flood due to [issues with] drainage systems, it’s raining more or the area is nearby a lake.”
Buyers can get flood insurance estimates for homes with the help of a Realtor during the search process, said Jennifer Wollmann, 2021 Chairman of the Board Miami Association of Realtors and Realtor-Associate with Berkshire Hathaway HomeServices EWM Realty.
Generally, that estimate comes from insurance brokers, but recently the Miami Association of Realtors partnered with CartoFront to allow its members access to automatically generated flood insurance estimates on any home in South Florida. The service shows estimates for flood insurance through the National Flood Insurance Program, run by FEMA, and private flood insurance companies for any property in Miami-Dade through the realtor’s private site, the Multiple Listing Services.
“Realtors have had contracts pulled because buyers later say that the flood insurance is higher than they expected,” said Luis Gazitua, partner at JAG Insurance Group.
Flood insurance rates for new property owners are set to rise in October, but Gazitua said sellers can transfer their policies to the buyers to keep prices lower.
“If you are getting a 30-year mortgage on the beach, let’s say you are paying $3,500 per year on flood insurance, you can transfer that to the buyer,” he said. “Not a lot of people know that you could inherit the policy. It is the only policy that could be transferable. The only thing that would change is the name on the policy.”
This story was produced in partnership with the Florida Climate Reporting Network, a multi-newsroom initiative formed to cover the impacts of climate change in the state. It first appeared at the Miami Herald.