....or what effect it will have on the value of your home.
In 2012 I was living in a beautiful townhouse in the West Village – one of the most expensive zip codes in the United States. I had recently brokered a townhouse sale one block away to one of the wealthiest men in the world for a record price of $25M. My neighbors were Sean Parker and George Benson. Ironic that the creator of Napster was living next to one of the greatest jazz guitarists of all time. Michael Wolf (the author) lived downstairs. That’s the West Village. A diverse melting pot of mostly successful creative people. We occupied the top two floors and the roof of the townhouse and other than the two-flight walk up, it was one of the most magical places I had ever lived in. On October 29 of that year, we all braced for Hurricane Sandy. A few days later, my wife and I found ourselves in the dark, sitting in front of our fireplace for light and warmth and an empty refrigerator in the kitchen. Streets became rivers and our city was a disaster zone. But we were fortunate. By the time Sandy had unleashed and the city recovered, 44 residents were dead, $19 billion of damages was accounted for and 69,000 (yes – sixty-nine thousand) residential units were damaged. Thousands of New Yorkers were displaced. Sandy didn’t care if you had a doorman, a nice view, or were in a beautiful townhouse in the West Village. She also didn’t care if the value of your home was decimated overnight. Downtown was littered with exclusive luxury buildings that had flooded basements and no power. At the time, I wondered if the $25M townhouse I sold was worthless. (I brokered the same house sale again a few years later – for more money).
Today, if you buy a property on the West Side downtown, you are required to buy flood insurance. Insurance companies know that there will be another hurricane. Not “if” – but “when”.
Mayor Bloomberg was always fully aware of the risks of climate change and he tried to take the necessary steps to thwart it. After the hurricane, he said “As bad as Sandy was, future storms could be even worse. In fact, because of rising temperatures and sea levels, even a storm that’s not as large as Sandy could – down the road – be even more destructive... We have to look ahead and anticipate any and all future threats, not only from hurricanes but also from droughts, heavy downpours and heat waves – which may be longer, and more intense, in the years to come.” It is now 10 years later, and unless you don’t believe in science and have your head where the sun doesn’t shine, you know that climate change isn’t coming – it is here.
So what are we going to do about it? Some people are trying really hard, but significant change is next to impossible to implement. In this country, until most people are directly affected by a disaster, they will remain unwilling to be inconvenienced by a change. Be it gun laws, climate change or taking a vaccine that might save your life.
New York City’s 520-mile coastline is longer than those of Miami, Boston, Los Angeles and San Francisco combined. In 2013, Mayor Bloomberg outlined his proposal on what action was needed and how much it would cost.
No place is immune from the devastating effects of climate change. The Great Salt Lake in Utah is drying up. What once was a beautiful lake is now fast becoming a bowl of toxic dust that could poison the air around Salt Lake City. It’s a complete disaster brought on by climate change and population growth. Salt Lake City has barely enough water now to support its current population, which is expected to grow 50% by 2060. Imagine buying a lakefront house, for a premium, only for it to become a dessert front wasteland. This happened in Keeler California – a once thriving community on the shore of Owens Lake that emptied out after the lake disappeared. Now there are only about 50 residents remaining.
The world is starting to read more like another Mad Max movie. Here are some of the headlines from the past few months:
“As the Great Salt Lake Dries Up, Utah Faces An ‘Environmental Nuclear Bomb’”- NY Times
“Dangerous and life-threatening” flooding in Miami as tropical system drenches south Florida – CBS News
“Fire burning outside Napa grows to 570 acres, prompts evacuations”– Los Angeles Times
“Wildfire season ramps up as temperatures rise across Alaska”– Alaska News Source
All of this chaos will have a huge effect on global property values. The once priceless water-front home that you paid a high price for could become less desirable and worth less or worthless.
The cabin retreat that you bought for weekends in the forest could be burned to the ground.
It isn’t too early to consult with a climate expert when making a decision about where to buy. Instead of working with an agent who is bragging about selling real estate in the Metaverse, you should work with an agent who has some understanding of future real-world climate consequences. Smart developers and buyers have already started taking these issues into consideration. I am about to launch a project on the West Side of Manhattan where the developer has smartly designed the entire mechanical and engineering system of the building to be housed above the ground. If in the event of another hurricane, and if the city goes dark – this building will remain with power, healthy and safe. That’s worth a lot.
Side Bar:
This week, the golf world was turned upside down by LIV – a new rival to the PGA tour. LIV has managed to attract talent with huge purses for players. While I understand the appeal of someone like Phil Mickelson taking a $200M signing fee (more money than Tiger Woods earned from winnings in his entire career), I can’t help but be disappointed. What Phil is doing by taking this fee is acknowledging that his primary pursuit is money. This happens in a lot of industries – not just the sporting world. I’m not sure what that extra $200M will do to improve his lifestyle, but when you sell yourself to the highest bidder you are making a statement about your personal values. You honor the purse more than brand loyalty, legacy, and integrity.
I’d love to hear your thoughts on the above and I plan on sharing some of your responses on climate change and how it affects real estate decisions and value in a future Padkos.
Let’s Do This.
-Shaun