Page 18 - Abacoa Community News - September '23

Page 18, Abacoa
Science On The Cutting Edge

Study: Homebuyers Facing return and New Orleans an 8.33 percent return. The higher returns In the past several periods existed, during which ice
Overvalued Markets Despite indicate that the prices in these markets will stay well supported. sheets were exposed to strong climatic changes. For example,
“Higher returns from rent in the eastern half of the United States
21,000 years ago the global average temperature was about
Prices Moderating help explain recent price performance differences between the 5 degrees Celsius colder and the sea level about 120 metres
western and eastern halves of the country,” Johnson said. “These lower than today. Large ice sheets covered Greenland,
By Amber Bonefont high gross returns can be calculated from a metro’s price-to-rent Antarctica and parts of North America and Eurasia – a total of
Housing prices are ratio by simply inverting the ratio. In general, prices are probably approximately 8 percent of the Earth’s surface. About 19,000
starting to stabilize going to be well supported in most of the Sun Belt states.” years ago, temperatures began to rise, and a large proportion
across the country, of the ice sheets disappeared. This transition is called the last
though homebuyers The Role Of Ice Sheets For deglaciation. Today, only the Greenland and Antarctic ice
waiting for a break in the sheets remain. In order to better understand these climate
market may not find it The Climate changes and the interactions between ice sheets and the
anytime soon, according to climate, we perform long-term simulations using our newly
researchers at Florida Atlantic Today, ice developed climate model. By using this model, we also want
University (FAU) and Florida sheets cover an to draw conclusions about the evolution of the future climate.
International University (FIU). area that is almost Small Differences Have A Strong Impact On The Climate
Price increases have as large as South One focus of our work has been to gain a better
lessened month-to-month America. Even though this equals only about 3 percent of the understanding of the impact of uncertainties in the extent
in areas like Seattle, where Earth’s surface, they play, similar to Arctic sea ice, a major and height of ice sheets on the climate. To do this, we
prices only increased about .2 percent; Charlotte, N.C., .3 role for the climate. In order to investigate ice sheets and simulated the last deglaciation with different ice-sheet
percent; and only .4 percent in Portland, Ore. Jacksonville their interaction with the climate, we are developing a climate reconstructions as boundary conditions. The reconstructions
and Phoenix saw slight price declines of .03 percent. model in which the extent of the ice sheets changes over time. are obtained through the analysis of geological remains
“Prices are still moderating in the majority of the country, Such changes and interactions have so far been insufficiently of past ice sheets, which are, however, temporally and
especially east of the Mississippi,” noted Ken H. Johnson, represented in conventional climate models. spatially incomplete. This leads to various reconstructions,
Ph.D., real estate economist at FAU’s College of Business. In recent decades the ice sheets of Greenland and Antarctica which differ considerably in terms of their ice sheet height
“There’s not much price movement. But, once you go west, have decreased dramatically, and scientific projections suggest and extent. Our model calculations show that even small
you see some price declines.” an increasing retreat in the future. Ice sheets form on land in differences in these characteristics have a strong effect
Despite the beginning stages of a moderation in housing regions with sufficient snowfall, which compacts and forms on the climate. The differences influence both the climate
prices, markets throughout the country remain significantly ice over time due to compression. They are therefore created during the last glacial period and the timing and extent of
overvalued compared to their long-term pricing trends. It’s a sign differently than sea ice, which is often discussed in the public, abrupt climate fluctuations during the last deglaciation in the
that it could be years before prices return to where they should and forms by the freezing of seawater. As the major part of an northern hemisphere. The main reason for this is that the ice-
be, and buyers are no longer paying a premium for a home. ice sheet is located on land, the melting of ice sheets leads to sheet height and the addition of meltwater released into the
Atlanta remains the most overvalued market in the country, a rise in sea level, unlike the melting of sea ice. Depending on ocean from changing ice sheets impacts the atmospheric and
with buyers paying an almost 48 percent premium. Next highest the amount of greenhouse gas emissions and the associated oceanic circulation. These in turn regulate how much heat is
is Detroit where homes are 45.88 percent overvalued; Tampa, melting of the ice sheets, the sea level is likely to rise by transported from subtropical regions into the North Atlantic
43.09 percent; Memphis, Tenn., 42.65 percent; North Port, 42.59 between 0.3 and 1.1 metres until the end of this century. This and thus determine the climate in the adjacent regions, such
percent; Cape Coral, 42.18 percent; and in Charlotte, N.C., 41.63 has not only climatic but also socio-economic implications, as Europe.
percent. In Miami, an area that shows little signs of a decline, as around 267 million people worldwide live in areas that lie
homes are 38.73 percent overvalued. The full ranking can be less than one metre above sea level. The Role Of Ice Sheets on page 19
found at the Beracha and Johnson Housing Market Ranking.
“There’s some concern in buying if you are looking to
resell in a short time. But, if you are planning on staying in the
home for several years, purchasing should perform as well in
terms of wealth creation as renting and reinvesting,” said Eli
Beracha, Ph.D. of FIU’s Hollo School of Real Estate. “For
example, in Miami, there’s no reason to suspect a crash in
prices as witnessed 15 years ago when the average property
lost upwards of 60 percent in its value. Supply and demand
are completely different this time around.”
Each month, FAU and FIU rank the 100 most overvalued
metro areas using publicly available data from online real
estate portal Zillow or other providers. The data, which extends Simulated north hemispheric ice sheet extent at the Last Glacial Maximum (LGM – circa 21,000 years before present; (left)
from January 1996 through the end of May, includes single- and around 1850 (right). The figure shows ice velocity and primary production through photosynthesis, as well as meltwater
family homes, townhomes, condominiums and co-ops. input from icebergs to the ocean. During the LGM, a Heinrich event can be seen in the east of the North American ice
The ranking is part of FAU’s Real Estate Initiative, a sheet, which is characterised by an increased ice velocity and an increased input of meltwater by icebergs into the ocean.
collaboration of professors at FAU, FIU, Florida Gulf Coast
University (FGCU) and University of Alabama to help the
average consumer make informed decisions about housing.
The initiative releases three monthly indices looking at rent Need More Storage?
prices, housing prices and whether market conditions favor
buying or renting.
Some markets, like those on the East Coast and in Sun Belt WE CAN HELP!
states are remaining overvalued because of their price-to-rent
ratios. A higher return on rents indicate that prices will likely
stay stable, while a lower return on rents suggests the opposite.
For example, Miami offers homeowners a 7.45 percent return on
gross monthly rents, while El Paso, Texas offers an 8.9 percent

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