A closer look at housing market actors' dynamics in responses to sea level rise in Miami-Dade, Florida.

Abstract

Sea level rise (SLR) dynamics pose significant challenges to coastal residential markets, including the likelihood of property valuation disruptions and the relocation of coastal populations from areas of high risk to safer inland locales. Understanding its impact on the residential markets of coastal cities is essential for developing adaptation and mitigation strategies. Existing studies primarily focus on property prices to observe risk factors, which limits the ability to capture the diverse behaviors and responses of market participants, including sellers, buyers, and lenders, to climate change impacts. Therefore, a more comprehensive analysis is necessary to understand these complexities and inform policy development. The main goal of this study is to assess the impact of climate change on the local residential market in Miami-Dade County, one of the riskiest regions due to environmental changes. Unlike previous research, this study accesses both prices as an indicator of sellers' reactions and transaction volume as a measure of buyers' reactions to SLR-associated risks, deepening our understanding of the varied dynamics among market participants affected by climate change. In this research, we examined the data at the census tract level covering years between 2009 and 2020, which enables us to include the effects of socio-demographic factors during periods of heightened public attention to SLR around 2013. We employed a difference-in-differences method to assess how the local residential properties in different SLR exposure levels react to climate change risk. The findings indicate that transaction volumes declined in 2013, preceding a price decline in 2016 within high-risk groups, presenting a notably divergent pattern from low-risk areas.