Pepe Billete, the Jills, and Others Talk Real Estate and Rising Sea Levels
Pepe Billete will represent the new hello.miami domain
Photo by Stian Roenning
Recently, as I was canoeing my car through the flooded aftermath of a typical rainy South Beach afternoon, a thought occurred to me. In 101 years, Miami Beach has gone from being an uninhabitable mojon con pelo to one of the most popular travel destinations in the world. The greater Miami area received a record-breaking number of visitors in 2014 — roughly 14.6 million tourists pumped an estimated $23.8 billion into the city's economy, and almost half of those visitors (47.8 percent) stayed in Miami Beach hotels.
Seven miles of sandy beaches paired with Caribbean food, a tropical climate, and a clothing-optional disposition make for a great place to live and vacation. But observe any pobre infeliz who has the misfortune of driving through the soggy, congested streets of Miami Beach after a rainy day, and he'll tell you there's a serious problem that some people are still unaware of and that many local developers don't want to acknowledge. Everyone in the nation is talking about it — Vanity Fair, Wired, the New Yorker, and even National Geographic.
Miami is sinking, they say. And chances are it'll happen in the 21st Century.
Hal Wanless, chairman of the University of Miami’s geological-sciences department, has been studying rising sea levels for close to 50 years and has already said — based on his extensive knowledge and calculations — that in another 50 years, much of Miami Beach may be underwater.
The average elevation in Miami-Dade County is only six feet above sea level, and with sea levels that are rising at the rapid pace of almost an inch a year, the Magic City will have to perform some serious magic tricks to prevent Hialeah from becoming oceanfront property. In about 19 years, sea levels have risen almost four inches in Miami, and though water levels in 1996 were close to predicted values, water levels in 2014 were higher than predicted, which has disrupted planning and preparation for local weather events such as hurricanes and rainstorm floods.
Now look, I won't pretend that the first 400 times I heard about this, it inspired me to give a shit. I mean, coño pipo, worst-case scenario, we’re talking about 25 to 30 years before any of this water becomes a serious problem. And given the way I like to roll the dice with my pinga, chances are I'll be too busy fighting off some superhybrid viral strain of Zika, Ebola, or swine flu I contract from una puerca con el bollo podrido. I’ve always been more of a live-for-the-moment kind of mueñeco.
But sitting in my car during a rainstorm in South Beach in the middle of rush-hour traffic made me realize that (1) the Beach is already dealing with the irreversible effects of sea-level rise; (2) what the fuck will this do to the prices of the properties I own in SoBe; and (3) I really need to start using condoms.
Why is this happening, and what does it all mean?
It's happening because water expands as it heats. If temperatures continue to rise, sea levels will continue to rise as well. This process is known as thermal expansion. The Intergovernmental Panel on Climate Change has predicted that by the year 2100, the ocean (everywhere, not just in South Florida) will rise more than three feet. The bad news for South Florida is that our title as the culo sudado capital of America seems pretty secure for the next 100 years. The good news is the eminent increase in peste a bacalao will likely kill us before the heat does.
Where does this leave us Miamians, and what are we doing to fix it?
The seven-mile barrier island known as Miami Beach has already ordered its seawalls to be raised, but this won't stop water from seeping up through the limestone bedrock. It also won't stop saltwater intrusion into aquifers used to extract freshwater.
One development company, Dutch Docklands, doesn't seem to think rising sea levels are a problem in Miami. Frank Behrens, executive vice president of the company, actually views this issue as an opportunity. His idea is to turn Maule Lake, a privately owned body of water in North Miami Beach that was once a rock quarry, into a floating village. This village would, of course, include 29 private islands (each with its own four-bedroom villa), a beach, a pool, palm trees, and a dock. These villas would be priced at $12.5 million each. I know what you're thinking, and I said the same thing: ¡De pinga!
How is this affecting real-estate and rental prices in Miami Beach?
According to a 2014 report conducted by Douglas Elliman Real Estate and Miller Samuel, housing prices in Miami Beach are holding steady despite the region's rising sea levels. In fact, no one seems overly concerned about owning a piece of property that could be submerged in only a few decade, which begs the question: ¿Que cojones esta pasando?
I called some friends in the real-estate game to get some expert opinions on how they think this potentially devastating situation will affect the Miami market now and progressively into the future.
I first called my friend Tim Allen, who owns Blackstone International Real Estate in Miami Beach. He was too busy to give me an overly detailed answer, but he effectively summed up his thoughts in a single sentence that sounded a lot like he was reading from a fortune cookie.
Me: Tim, what is this rising-sea-level issue going to do to the value of my condo on the Beach? How serious should I consider unloading it?
Tim: I’m reminded of the euphemism "a rising tide lifts all ships." If the sea level rises, Miami Beach real estate will be more scarce and therefore more valuable.
Me: Where are you, at the China Buffet? What the fuck are you talking about, pipo?!
Tim: [dial tone]
I think what Tim was trying to tell me with his bootleg haiku is that supply and demand will come to a crossroads and price out a good segment of the middle-class population living there now. This puts me in a fucked-up predicament because I’m renting the place out to a nice lesbian couple from Slovakia for $3,500 a month. If Tim is right and the Beach starts to become even more expensive than it is, my favorite rusas marimachas se van a cagar en mi and find a cheaper place to live.
Tim’s prediction freaked me out, so I decided to get a second expert opinion from the two most successful real-estate people I know: The Jills, arguably Miami's most successful real-estate duo. They specialize in local luxury residential property sales and know more about the volatile nature of Miami’s market than anyone in the city. They invited me to lunch and offered me their input on rising sea levels and what this could do to Miami's market.
Me: Will the topic of sea-level rise have an affect on Miami Beach real-estate prices?
Jill Hertzberg: Although sea-level rise can impact Miami Beach real-estate prices, it hasn’t been a primary driver of them. Other factors — such as the strong dollar, interest rate changes, instability in certain regions, and tax implications for domestic buyers — have a greater effect on prices. The City of Miami Beach has been making significant investments in infrastructure. Sunset Harbour was once known for the worst flooding in Miami, and now it’s not a common flooding area because the streets were raised and pumps were installed. While these measures were being adopted and construction was underway, the prices were negatively impacted. However, once these improvements were completed, home prices actually increased.
Jill Eber: We are fortunate that the City of Miami Beach has been reacting quickly and working diligently to improve its infrastructure in response to sea-level rise. Fortunately, we have the attraction of year-round great weather, culture, sports, entertainment, great food, and an unmatched lifestyle, and from a real-estate standpoint, we have not seen an impact in pricing. There has definitely been an increase in domestic buyers, and even with fluctuations in currencies, we are still seeing capital flight.
Me: How about specifically for rentals, will sea-level rise cause a spike in rental prices for homes and/or condos?
Hertzberg: We have not seen a correlation between sea-level rise and rental prices. One of the factors that may impact rental prices is the large amount of new construction condo inventory in the pipeline. The majority of this new product is investor-owned, so it will be listed for rent or sale after closing. However, we have had a handful of buyers who have specifically requested new construction due to the new code and high elevation. Even though most of the new construction demand is design-driven, the high elevation is appealing to some buyers.
Eber: I don't think we have seen a direct correlation between sea-level concern and rental prices. There are many other factors that come into play that affect pricing. Rental prices continue to rise in Miami due to supply and demand. Rental pricing moves in concert with sale pricing. As insurance and tax costs increase, many landlords raise rents. Also, many rental buildings are converted to condos, which affects supply and impacts prices. For example, one- and two-bedroom units in the Miami area, on average, have increased 7 and 8 percent, respectively, in the past six months, according to RentJungle.com. That's a pretty significant jump occurring organically. In addition, rents escalates as those buying rental buildings pay hefty numbers for purchasing the buildings and also as owners renovate buildings to attract the best tenants.
I am in no way an expert, but with Miami Beach already experiencing crippling flooding issues, I’m not sure if I’m as optimistic as the Jills. Improvements to the city’s drainage system, sea wall, and whatever other invento they concoct to keep Miami Beach from turning into a piece of Biscayne Bay may or may not work. But regardless of their success, you can rest assured that it won’t be cheap. Will that result in an increase in city property taxes? You bet your sweaty asshole it will.
Now, common sense tells me that anyone who can afford to buy a singueta condo on the Beach now doesn’t give two shits if property taxes triple in the next 20 years, but with higher-end condos selling as high as $52 million a pop now, the real question is: Will there be anyone around rich (or stupid) enough to sell it to later?
Of course, there’s always the possibility that all of this is bullshit and the fear of cataclysmic flooding on the Beach is Miami’s real-estate version of the Y2K scare. I mean, in 1969, scientists predicted that Southern California would disappear by the mid-'80s and here we are almost 50 years later, and while it may suck giant donkey dicks as a state, California still hasn't fallen into the ocean. So maybe the Jills are right and the tossup for South Florida isn’t so bad after all. At the end of the day, it's out of my control anyway, so pa' la pinga. And if shit gets crazy-expensive and las rusas marimachas move out of my place, I'll just revert to using the condo for what I bought it for back in the '90s: a place to fuck drunk girls I meet at Nikki Beach.
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