A Policy Solution to California’s Coastal Housing Crisis?

Image: BriYYZ/Flickr

by Natasha Lasky, ODP Staff Writer

Southern California’s famed coastline is home to some of the nation’s most desirable real estate, yet rising seas are quickly putting these homes in jeopardy. And over the next decades, $100 billion worth of American homes could potentially suffer massive damage from chronic flooding.

California state legislator Ben Allen has a controversial potential solution: a revolving loan program, where  California counties and communities will buy up coastal homes. Then the state would rent these properties to the homeowner or to another resident, and use that rent to pay off the mortgage until inhabiting the property becomes too risky. 

  • This bill passed unanimously through California’s Senate Natural Resources and Water Committee last week, and will soon be voted on by the full legislature. 
  • This buyback program would be the first of its kind to operate on such a large scale, and could help assuage a home insurance crisis in the making. 

Why This Matters: The threat faced by coastal homes across the nation could create another mortgage crisis. If flooding drives down home prices and homeowners can’t find ways to make repairs on houses that are worth far less than their outstanding debt, the houses will have to be repossessed by lenders.

California will be hit particularly hard. According to the state’s nonpartisan Legislative Analyst’s Office, in the next 30 years, $8 to $10 billion of existing property in California will be underwater, and an additional $6 to $10 billion will be at risk during high tide. What’s more is that last year’s devastating wildfires gave a preview to what awaits many homeowners: thousands of California homes have become uninsurable due to wildfire risk.

Though Senator Allen’s legislation hasn’t been put to the test, it gives hope that it could construct a more permanent solution to this imminent problem.

The Future of California’s Coastal Properties: There’s precedent for this buyback legislation — over the last 30 years, the Federal Emergency Management Agency has bought up over 43,000 homes in the United States. Most of these homes are on the East Coast, and while their owners are in good standing on their mortgage, the buyback process is complicated and can take up to five years. 

Buying back houses on the West Coast could be particularly complicated. Homeowners may not participate, and the high value of many of these homes places a sizeable burden on public funds.

But optimism remains about this buy-to-rent project. If the state buys the coastal property and bolsters the coastline through seawalls,  the value of the properties will increase and entice homeowners to stay. 

Long-term, making these houses public property gives communities more time and options to thoroughly plan for the destruction of condemned homes and for municipalities to prepare for the eventual loss of property taxes.

Senator Allen told NPR:Nobody wants to come to terms with what’s happening. We want this to be here forever. We want to be able to walk along this beach and enjoy these beautiful houses and this beautiful view forever. But you can’t beat the sea.”

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