When will climate change turn life in the U. S. upside down

Investment Analysis Clubs Macro Economic Trends and Risks
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Jeff Masters has written a good essay. He only mentions the Old River Control Structure in an oblique reference. He is not an economist so has missed the true scope of losing the Old River Control Structure (He has an entire essay on the structure) When I read Ziehan’s writings on what make the U.S. the world empire, it became clear that the Old River Control Structure is the keystone holding the entire world’s macro economic system together.

But enough with TEWOKINI, that will be slow and even a failure of the Old River Control Structure today would allow me years to plan for the end of the world, a go bag is not required.

On the other hand, as an owner of a water front condo in Florida, there is some urgency in Jeff Master’s essay.

In the U.S., the most likely major economic disruption from climate change over the next few years might well be a collapse of the housing market in flood-prone and wildfire-prone states. . .

A 2023 study (Fig. 2) drew attention to a massive real estate bubble in the U.S.: the vast number of properties whose purported value doesn’t account for the true costs of floods. The study estimated that across the U.S., residential properties are overvalued by a total of $121-$237 billion under current flood risks. This bubble will likely continue to grow as sea levels rise, storms dump heavier rains, and unwise risky development continue. . .

Crawford addressed the issue in a 2024 essay, “Who ends up holding the bag when risky real estate markets collapse?” Citing financial guru Burt, she concluded: “2025 or 2026 is when things give way and it becomes very difficult to offload houses and buildings in risky places where mortgages are suddenly hard to get, much less insurance.”

(Note: Not included is a discussion that some disagree with this 16 to 30 month scenario.)

But like Burt, climate change futurist Steffen predicts the real estate Brittleness Bubble will pop within five years (10 at the most).

I am planning retirement and departure from Florida in about 30 months. My plan has been to liquidate about that time. According to this, I don’t have that time.

Cheers
Qazulight

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Despite what they are trying to say, nothing big happens immediately. Even things caused by natural disasters. Sure a big earthquake followed by big fires can destroy much of a city, but it doesn’t follow that large changes all across society happen immediately after such an event.

Now as far as bubbles popping, that can happen at any time, regardless of climate, so such a prediction after 13 years of relatively fast paced growth in property prices is pretty “safe” because there is a likelihood of a bubble pop whether or not their proximate cause is indeed the cause of it.

If you decide to sell early, do so because of a higher than usual possibility of price declines due to the sum of all the factors (higher interest rates, condo fees and assessments going up, insurance going up, fewer people moving to FL, more people moving out of FL, etc) rather than just the one factor of climate changing (even if the climate changing contributes to some of those other factors). You can already see condo prices dropping due to higher condo fees and higher assessments, and even just over fears of higher costs of such things (even some of the newer condos that aren’t likely to see heavy assessments for quite a while have had moderate price declines).

In 2007/8, when the value of my house shot up to an absurd value, I joked with my wife that we should sell it, move into the rental apartments nearby, and then buy it (or similar) back in 2-3 years after prices came back to normal. I could have sold the house, and then bought it back for $260k less (really!), and the rental for 3 years would have been 3 x 12 x $3200, or $115k. So in theory I could have made $260k - $115k - $25k (approx 2 x closing costs), or $120k from that transaction over the 3 years. BUT, after I bought again, because of the way property taxes work here, I would have been paying an extra $6k a year of property tax thereafter. So far, 14 years of extra property tax would have come to $84k, and more as each year passes. So, while the deal at the time may have been attractive, it’s attractiveness would wear down as the years pass. It still probably would have been nice net positive considering that the $120k profit would have been invested for all these years. But we didn’t do it. Anyway, after that long story, I am thinking similarly again today. The difference today is that I wouldn’t buy the house (or similar) back because by the time the few years of decline pass, I won’t need a whole house anymore. If you are definitely retiring and leaving in 30 months, it may be worth starting the selling process now, get yourself a good price in 6 months or so, rent in the area (presumably still working) for another 24 months or until the end of those 30 months, and then move. Adds one move, but that might be a good thing because it forces you to get rid of “junk” earlier, but it reduces the risk that you sense.

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As Mark indicated, things happen relatively slowly. However, if you are seriously worried then put your place on the market and rent for a couple of years. Minimize your downside risk.

DB2

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