Sandy Point enjoys a day of calm on a recent January day. Homes along the area’s shorelines continue to sell at the same pace as inland homes unaffected by coastal risks, realtors report — despite flooding after last December’s king tide events and predictions for increasing sea-level rise. (Kai Uyehara / Salish Current photo © 2023)
High tides and storm surges combined to damage many homes and other properties in coastal communities in December, and rising sea levels threaten inundation in decades to come. For waterfront homeowners and buyers, the prospect of shoreline living begs the question: Do value and desirability of a coastal home outweigh the risks posed by the changing environment?
Waterfront property has always been the most coveted, said Merri Ann Simonson, managing broker for Coldwell Banker in Friday Harbor. This month, she said, the least costly waterfront home on the market in San Juan County is listed at $875,000; most prices exceed $1 million. Brokerage firms in the county sold 62 waterfront homes in 2022 and 92 in 2021.
In the next 50 years, sea levels will rise by 20 inches in a medium-rise scenario across Whatcom, Skagit and San Juan counties, predicts Climate Central’s Surging Seas Risk Finder, with a moderate-level flood adding another 26 inches on top of that.
“There’s definitely more risk out there,” said Adam Thurmond, a Farmers Insurance agent in Burlington. “Flood is one of them, (and) erosion on the hillside and more wind on the coastline cause more wear on homes.”
Across the coastal U.S., some banks are protecting themselves from risk by requiring larger down payments. Some waterfront buyers reportedly are retreating from conventional 30-year mortgages, opting for interest-only mortgages that are less costly if a home becomes uninhabitable because of rising seas.
Seaside mortgages
The environmental risks of coastal living make some waterfront properties harder to mortgage, which makes them appraise for less, said Braden Gustafson, appraiser for Gustafson Associates in Bellingham. But that hasn’t been the case locally.
Properties too risky to insure at low rates deter some potential buyers, Gustafson said; nonetheless, last year 75% of waterfront-home buyers financed their purchases. [Updated Jan. 23, 2023; previous reference to “finance” changed to “insure at low rates”]
“Borrowers are qualified for mortgages based on income, credit and assets,” said Krista Jones, mortgage loan center manager for Peoples Bank. Properties are then appraised and evaluated, so mortgage offers to borrowers cannot be said to be impacted directly by coastal risks.
A lender “would not be asking those questions or considering any repercussions regarding possible climate change,” said Tracy James, mortgage lender at Movement Mortgage in Friday Harbor. “[These are the] same loans as if the property was inland — absolutely no difference.”
On the appraisal side, “being in a flood zone is considered a negative,” Gustafson said. “An increase in risk of damage or increase in the flood insurance premium has a negative effect (and) erosion is taken into account on a case-by-case basis.”
But the draw of living on the coast outweighs the risks for most, he noted: none of these factors have made coastal homes decrease in value.
Navigating coastal risks
Flood risks due to storm surges, high tides and rising seas may not concern buyers in the short term, but fitting into the shoreline environment doesn’t end there. Coastal homes may come with baggage.
Sellers must disclose any property hazards with a Form 17 covering flood hazards and environmental concerns, said Sheryl Albritton, broker for San Juan Islands Real Estate. She wishes the form went into more depth in disclosing existing shoreline armor, sea-level rise and impact on fish habitat. Requiring more information on Form 17 would take a change in state law.
The form “is merely a disclosure to the best of [the seller’s] knowledge,” Simonson said. “If it’s a little second home or something where [the homeowner] is never here, they would have no idea what the king tide looks like on their property.”
Real-estate agents acquaint buyers with quirks and hazards on waterfront property, Simonson said. When selling, Simonson uses a tide chart app to relay high-tide information to buyers, and discusses everything she knows about the property, which she says is both best and common practice.
“We must be honest and treat all parties fairly. We can point them in the right direction,” she said. Agents may follow up with referrals to professionals such as marine biologists, insurance agents, general contractors, surveyors or geotechnical engineers.
The buyer’s burden
When it comes to shoreline armor such as bulkheads or riprap, sellers must disclose the permit status of the structure, but decision and education come down to the buyer again.
Washington is a due-diligence state, with the onus on the buyer to research, investigate and analyze a prospective property beyond the seller’s representations; the buyer may assume the defects and problems associated with the property or its improvements. Agents are able to go only so far to educate buyers, and sellers are required only to disclose known hazards.
“Where most people struggle is, they don’t know what questions to ask, who to ask, who to talk to,” Albritton said.
Brokers collect all public-record documents of armor-permitting status, Simonson said, but can’t act as permit enforcers for undocumented structures on behalf of the buyer or the impacted environment.
Any unpermitted armor not grandfathered in can still be deemed acceptable by the buyer upon buying the house. Buyers may choose to inherit environmental impacts and vulnerability to complaint and possible subsequent fining, Simonson said.
Buyers can install alternative soft armoring such as anchored shoreline logs, or repermit or remove existing armor, Albritton said. But such actions can be more expensive, time-consuming and stressful than the buyer initially anticipated.
“The due diligence has to be on the buyer or the agent to connect … with a consultant, but sometimes [buyers] don’t know what they need,” Albritton said. She thinks all permitting should be verified before the sale. [Updated Jan. 23, 2020; deleted reference to armoring permits only]
If buyers want to build or to make improvements on the shoreline and are worried about sea-level rise, they need to study the floodplain maps, or hire feasibility consultants or service providers to determine environmental impact.
At the end of the day, if they want to buy a house that’s hanging on the edge of an eroding bluff, they can.
“If you buy a house in a floodplain, nobody’s going to walk you through everything you need to know, and there’s nobody other than Friends of the San Juans out there educating people about shorelines” in the San Juan Islands, Albritton said.
However, she believes shoreline homeowners are becoming more educated on coastal environment politics.
“When somebody’s coming in to get a decent waterfront home, you’re over a million dollars,” Simonson said. “So the buyer that has that type of money, if they’re not able to research and educate themselves on it, they sure can pay somebody else.”
Still loving the waterfront
Time isn’t on the side of coastal waterfront homes, with sea levels predicted to rise over a foot across the three counties in about 30 years, the most traditional mortgage length.
“Weather-related incidents have increased over the years with the changing climate, but we have seen minimal effect to the coastal housing market in [Whatcom County’s coastal] region,” Gustafson said. “People tend to have short-term memories.”
Many coastal homes are passed down within families, Albritton said, but it really depends on the homeowner if they are cognizant of sea-level rise. She’s seen people on both sides of the fence.
Simonson said many potential buyers consider the level of the property’s bank, whether there will be erosion on a high or medium bank or if rising sea levels will affect a low one.
Rich Krebs lives part-time on Lopez Island on the Fisherman Bay peninsula in a home he plans to pass on to his children. The home is on a medium bank, making it less susceptible to sea-level rise in the near future, but tides and wind are eating away at the bank, affecting the county road that accesses Krebs’ property and those below it, Krebs said.
The risks of coastal living were “in the back of our minds” when considering building a multi-generational home. “We were selfish in that we love the property, Lopez Island, and want to use it in our lifetime,” Krebs said. “It was an investment for our lifetime. Our property is going to remain, but accessibility is the problem.”
Mary Lynn Lyke [who serves on the Salish Current board of directors] watched king tides — the likes of which she had not previously seen in her 23 years on Skagit County’s Similk Bay — strip logs from the beach in front of her home as water rose over her boat and lawn in late December.
For her, the benefits of coastal living outweigh the risks. She weighed flood concerns when considering moving to the area and said such flood events don’t worry her about the future. She loves “waking up and watching the sunrise over Mount Baker across the bay, crabbing out of our front yard, playing in the water and being able to kayak out through the islands.”
“Sea level is rising, but it appears to have had no effect on home values in the area,” Gustafson said. “Sandy Point home prices have changed similar to the region over time. I have not heard a potential buyer say they don’t want to buy in a certain location because of the sea level rising. There is too much demand for these types of properties and not many buyers are looking more than 20 years in front of them.”
Sea-level rise “is in the news enough that they’re thinking about it, but until it happens … it just really depends on the person,” Albritton said.
Insurance dilemmas
In the San Juan Islands, most houses with foundations lower than 14 feet above sea level are required to have flood insurance if a federally insured lender is involved, Simonson said.
The islands are 90% medium- or high-bank, making flooding and tidal risks minimal, said Tammy Cotton, a Farmers Insurance agent in Friday Harbor who said she’s received only one flood claim from tidal damage in 15 years. Coastal island dwellers may get insurance for perils not named in homeowner’s policy, to protect against erosion and earthquakes, she noted.
In Skagit County, one of the higher impacted counties in the state with both river and tidal flooding, about 50% of houses fall into the floodplain, Thurmond said.
“It is up to the homeowner to protect their assets,” Simonson said. “[The government] can only protect the consumer so much.” If homeowners are concerned about sea-level rise, they may want to consider flood insurance.
But that may not be possible. Within 30 years, half a million homes across the nation are predicted to experience annual floods due to climate change. That volume of claims would make such homes uninsurable.
“Flood insurance only covers fixing a home,” Cotton noted; it doesn’t account for the loss of value in the future.
Insurance rates are already increasing nationwide — including San Juan, Skagit and Whatcom shorelines — and many customers are seeing their coverage unrenewed, Thurmond said.
“I don’t know if these events [king tide, storm surge and river flooding] are becoming more frequent or not,” Thurmond said. “But there’s been a lot of loss the last several years and the damage caused is definitely increasing. If there’s a home that has had severe repetitive flood losses, it really narrows down the … options.”
Policies for severe repetitive-loss homes may be available through FEMA’s National Flood Insurance Program, but cost is higher and coverage is limited.
Caught off guard
Thurmond said the king tide flooding in late December caught many coastal dwellers off guard. Many homeowners in La Conner have felt impervious to flooding, although only a foot of sea rise, which is projected in the next 20 years according to Climate Central’s Surging Seas map, would be enough to cover the town’s waterfront.
A flood insurance requirement may be subject to negotiation. In the San Juan Islands, homeowners can contact a surveyor to assess their location relative to the floodplain to opt out of flood insurance, Simonson said.
Insurance agencies also contact surveyors for Letter Of Map Amendments to clear properties of their flood insurance requirements, Cotton said. They do not attempt to recategorize a property into a flood zone if it wasn’t before, though they do provide flood insurance for many houses outside the floodplain.
“I don’t think there’s any question that the flood risk is going to continue to increase [or that] we will see flooding in areas that don’t have a flood requirement attached to it,” Thurmond said. Homeowners may feel comfortable in areas without a flood insurance requirement, he noted, but it may be wise to look more deeply; flooding can impact areas one wouldn’t expect.
— Reported by Kai Uyehara