February 20th, 2019 by Michael Barnard
Florida has been the bellwether for real estate changes due to global warming-induced sea level rise, but it’s followed by multiple states on the eastern seaboard of the USA. Studies have found that billions have already been lost on coastal property values as buyers factor in the cost of rising seas. Tens of billions more are at serious risk of repeated flooding leading to complete loss of value in the coming decades.
But Arizona and southeastern US states are likely next to feel pain in their real estate markets due to global warming. It won’t be too much water, but too little in great part.
Arizona has already been significantly impacted by global warming, with an increase in average summer temperatures of 1.8 degrees since the 1970s. What’s more relevant is the increase in danger days, when the combination of heat and humidity makes it literally dangerous to be outside of any period of time, and makes outdoor work non-viable. Climate Central provides state-by-state breakdowns, comparisons and visualizations to assist policy makers and others to see likely impacts.
Arizona is also hard hit, with Phoenix projected to see 146 danger days by 2050, Tucson expected to see 135, and Yuma projected to have 159. As a harbinger of these changes, Tucson now has 24 more days above 100°F on average per year than in the 1970s, the second largest increase in the nation.
Here’s a way of thinking about it in this graphic from Climate Central.
The summer humidity is going up with the temperature and it’s the combination that’s lethal.
Here’s the short list of things that won’t be possible in the summer during the daytime and possibly at night:
- most agricultural labor
- most yard work
- maintaining golf courses
- road work of any kind
That humidity has to come from somewhere, and that’s the other edge of the sword.
Higher temperatures evaporate more water off the landscape, dry out soils and shrink the amount of runoff from rain and snow that makes its way into streams and rivers.
“For the same amount of snow falling, we’re getting less bang for the buck,” said Gregg Garfin, a University of Arizona climate scientist who co-authored the chapter on the Southwest. “All of that, based on the climate projections, really says that we’re drying out, and that it would take much more precipitation for us to counteract the effects of that drying.”
Arizona’s fresh water supply is seriously threatened. Unlike Miami, whose water supply is at risk for different reasons, Arizona can’t spend 2.5 times the money per cubic yard of water and desalinate sea water. There just isn’t any viable source of water for Arizona to desalinate.
So when will this start impacting real estate value? After all, Arizona is a pretty inhospitable place already which money, electricity and fossil fuels make livable in the summer and pleasant in the winter.
Global warming is slow, but cascade effects can be fast. At present course and speed, 2050 is looking like an ugly time for several parts of the USA. The southwest interior and southern Florida are likely at the top of the list of places which are going to be much harder to live in.
After all, no yards, no golf courses, rutted roads, very expensive water and not being able to play outside at anything for most of the summer doesn’t sound like a lot of fun. So people will start staying away, or leaving. Businesses will start failing, and the owners will pick up and go to someplace more amenable.
What that means for real estate is that there will be potential for value decline as early as 2030. There are various rules of thumb for real estate investment, but unless you are explicitly flipping in a very short period of time, in general real estate is a 10-year horizon acquisition. It’s very durable, not very liquid, and there are significant costs associated with real estate transactions which need to be balanced against gains.