Tampa and Rising Sea Levels

[Aaron Dixon]

Hey All,

A family friend of mine has instilled the fear of Tampa as a whole being a poor long term investment due to Sea Level Rise (SLR). It seems without a significant investment into preventative measures Tampa and the surrounding area will lose much of its value amongst other things. 

While I bought my first property in Riverview this time last year I’m now hesitant to even continue analyzing properties. Simply looking to get others thoughts on the matter. 

Thanks to all!

[James Hamling]

Quote from @Marcus Auerbach:

Quote from @Michael Masters:

Hey Aaron,

My day job is as an actuary.  Specifically, I am a Chief Pricing Actuary which means its my job to manage the team that prices insurance risk.  I do not price based on politics, I price based on facts and hard data.  My company is a specialty insurer, which means we sell policies where others fear to tread.  As you may guess, we do a lot of business covering Florida property.

Follow this link to insured losses since 1970:

https://www.swissre.com/media/...

Look at the left side of the chart then compare it to the right.  Clearly the risk of catastrophe losses has greatly increased and continues to increase.  Even after adjusting for items such as inflation this is clear.  Premiums for Florida are currently blowing up.  Companies are being forced to increase deductibles while paying twice last year's premium.  Those who own individual homes may not see the bite as Florida insurance regulators protect them from such increases, but these additional costs will eventually make their way through to those policies as well.

Count me as one of the few who considers global warming in my real estate purchases.  As an example, the city of Boston put out a report showing which neighborhoods would be impacted by various increases in sea level, I used this to decide which areas to stay away from.  I do this because I have a buy-and-die strategy, which means I hold it until it passes on to the next generation.  If I was only in it for the short term I may not care about these climate changes.

Again, I couldn't care less about the politics, facts are facts.

 here is the chart from your link for everyone to see:

My entire life I have worked in 4 "trades"; Farming, Finance, Real Estate and ENGINEERING. 

In Engineering we have this lovely thing called "Confirmation Bias Fallacy".    A persons sees the $-amount of insured payouts increasing and says "SEE, there it is, PROOF climate change is getting us!". BUT.... that's Confirmation Bias Fallacy. 

As this chart shows the increase in payout since 1981, let me ask how much does renovations costs today vs 1981? Is a roof the same price today as 1981? How has the prices of labor and materials in real market terms adjusted vs cpi? Because JUST doing an inflation adjusted chart does NOT mean it's adjusted against the market price inflation. 

Or how about density? Has density changed since 1981? An area could get the exact same hurricanes as it has for 14,000 years but if you ADD 10,000 properties per year, increasing density, yup, your going to get MORE damage each time. No change in hurricanes, just how many things we are putting in the path of them. 

This 1 chart/data-point alone says NOTHING. One data-point alone can ONLY feed Confirmation Bias Fallacy. 

If we look at data NOT skewed by this factor of us/humans simply putting more things in the area of known hurricane activity (that's all this chart actually says, were are idiots and build in stupid places) like hurrican powers, guess what we see. 

Most powerful hurricanes: 1924, 1932, 1935, 1944, 1955, 1961, 1961, 1969...... Before Climate Change science existed, we had MORE powerful hurricanes. So BY THE DATA it turns out hurricanes are no different over last 100 years. What's different is the stuff we have built in the path of such. And like morons we now want to wail and say it's the climates fault...... 

People 100+ yrs back were just smarter, to not build in those places. If you try putting a shed on a train-tracks who's fault is it when it's repeatedly destroyed? Are we to freak out saying there is an issue with trains hitting sheds? Or with idiots putting shed's on train tracks?