Coastal Real Estate in Places Like Florida Can’t Seem to Price Climate Risk

Asset prices are supposed to reflect risk, but the coastal real estate market has been challenging that notion for years. Not only is the threat of rising seas not “priced in,” but many of the most vulnerable markets in the country — think Florida — are also among the frothiest, with Miami area home prices up around 64% since 2019. Logically, buyers must either lack information about the climate threat or they’re intentionally choosing to disregard it, perhaps under the influence of climate-skeptical politicians.

Let’s start with the former — arguably the biggest source of concern and opportunity.