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Comment by pauldenton | Hacker News Reader

It always did seem curious that people who believed heavily in climate risk never seem to put their money where their mouth is when it comes to Waterfront property. If you believed there was a serious risk of sea levels rising you wouldn't spend millions on a house with a waterfront view below sea level If banks believed there was a serious risk of sea levels rising they would put a discount instead of a premium on waterfront property. But I still cannot find any discount property that is discounted because it's next to the ocean

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> But I still cannot find any discount property that is discounted because it's next to the ocean

Sea levels are expected to rise about a foot in the next 30 years, which will impair some coastal property but not all (much worse on the east coast than the west).

It's much worse on a 60-100 year timeframe. If a discount were being applied, you'd expect most of the reduction in value to be 50 years out. The present values of enjoyment over the next 50 years could far exceed those residual values, and so it could be hard to observe any discount that is present. E.g. even if future sea level rise lops 10% off the value, other factors could add more in the short term.

There's no discount because the vast majority of oceanfront property won't be seriously impacted for more than 50 years. So youre not finding what you're looking for because there is no rational reason for it to exists.

30 year mortgages are standard in the US. If the bank thought that in 28 years the house would be a foot underwater they wouldn't agree to a 30 year mortgage. 30 years or 50 years depends on which projections you are listening to

"The market can remain irrational longer than you can remain solvent" - John Maynard Keynes

>If banks believed there was a serious risk of sea levels rising they would put a discount instead of a premium on waterfront property

Banks aren't the ones setting prices on properties. And no one should base anything on the actions of banks because financial institutions generally know to basically sell off the risk as soon as possible (although that can come back to bite them as it did with the subprime thing, where they sold it off, but then many of them made bets on those risks). Their window of exposure is generally extremely small, and they'll keep dancing as long as the music keeps playing.

Further markets are irrational, and always have been. Even if you are absolutely certain that Miami is going to be devastated by climate change, for instance, you might still buy an overpriced oceanfront mansion because you know that you'll be able to find either a sucker or someone with the same assessment when the time comes.

If you have millions to spend on property, you may have millions to throw away. Elon Musk wasted billions on Twitter, so it’s no surprise that smaller wealth might be willing to waste a few million on a house.

This. People aren't wealth-maximisers all the time..

Also, people aren't rational or well-informed all the time.

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