The Effect of Gentrification in the Miami Real Estate Market
The Miami real estate market is facing a unique dilemma that some expert’s belief will become the status quo in many coastal areas: climate gentrification. Gentrification is an issue faced in many cities, especially large, popular cities like Miami where the number of luxury homes and condominiums are causing an overall rise in real estate costs throughout the city. Climate gentrification is a unique issue that has only come to the real estate forefront in the last few years. How is this unique gentrification affecting the Miami real estate market? And how will it continue to affect the Miami real estate market in the future? Let’s take a closer look at what climate gentrification is and how it is currently affecting real estate values in the Miami area.
Climate Gentrification: A Unique Problem
Climate gentrification, unlike traditional gentrification, is not the result of wealthier homeowners moving into the area. Climate gentrification is directly linked to the effect of the changing climate on the area, especially as it relates to the elevation of the home, the location of the home as it relates to the coast, and the overall structural integrity of the home.
An excellent example of gentrification can be found in two Miami homes currently listed for sale.
The first home is a contemporary mansion made of glass that sits right at the edge of the water in Miami beach. It is a stunning home with features such as a spa tub that looks directly out onto the ocean and glass doors that connect the home right onto a private dock. The current price is $25 million.
The second home is 5 miles away, on a street in Little Haiti where you might walk outside and find garbage or even a chicken or two. That home is listed for sale at $559,000--more than double the listing price from two years prior. And that value is expected to increase exponentially over the next few years. And real estate experts predict that this home is the more solid real estate investment--yes, even above the $25 million dollar mansion. Why? Because the home in Little Haiti is on elevated land inland--not on the coast like the glass mansion.
Rising Tides and Rising Prices
And this is not a unique case: a study going back more than 45 years and spanning 100,000 single-family homes found that homes on elevated land have increased exponentially in value over the past few decades, whereas homes on the coast are decreasing exponentially in value. Experts expect that coastal homes will continue to decrease as rising sea levels cause flooding and increase the risk of damage during storms. Some neighborhoods in coastal areas are already experiencing “nuisance” flooding when the tides come in, causing the wealthier population in these neighborhoods to seek out new homes in elevated areas--such as Little Haiti, which has been traditionally populated by low-income residents, who are now being displaced.
Climate gentrification will only continue as sea levels change, and real estate investors--and homeowners--must stay on top of the issue.
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