Econ 101 teaches us that price is driven by supply and demand. If supply is short and demand is high, prices are high. Do you know that old saying, put your money where your mouth is? People don’t spend their money on things they don’t believe in. Said another way, people don’t pay millions of dollars for something they believe will be worthless in a few years.
If global warming is real, and everyone really really believes it is real, a tiny shack on the beach does not cost $2.2MM. A tiny shack on the beach is literally worthless, or at most, it’s only worth whatever value the buyer places on the few short summers he may have the use of it, before it and the whole town is underwater.
Oh, BTW this example is a cheaper one, and not even close to being on the beach, actually:
If everyone really believes global warming is real, this entire town is worthless. People would be selling for pennies on the dollar to get out now. If the elites really believed their Teslas were saving the world, Avalon would be a ghost town.
Keep this in mind when you read that the $740B “Inflation Reduction Act” making its way through Congress this week includes $369B to “fight climate change.” HERE.
That’s your money. They really hate you.
What beachfront property says about global warming
Global warming is a crisis no one believes in. At least, most people don’t believe in it. The market shows us that. More technically, people voting in the mortgage market with their money on balance do not believe in global warming.
Sure, I could have started this by pointing out, as many other observers have, that warmists ex-president Barack Obama and billionaire Bill Gates have recently bought low-lying beach properties. That certainly seems in conflict with what they claim to believe about global warming and rising sea levels. But Obama and Gates are human beings. We human being are often inconsistent. We sometimes support USC football and UCLA basketball. Some of us root for both the New York Yankees and the Dallas Cowboys. We sometime drink more than we know is good for us.
Another thing that is true about President Obama and Mr. Gates is they are not smarter and are not able to process more information than the rest of us who make up the market. As of now, interest rates on loans for beachfront properties are no higher than interest rates for loans on other properties, comparing first homes to first homes and vacation homes to vacation homes. Thus, all of us — i.e., the market — are not concerned that global warming will affect beachfront property values negatively in the next 30 years…