People Moving to Disaster-Prone Areas in US/ An Investable Situation?

BenWP

The NY Times (paywall) published a fascinating analysis today about why natural disasters are affecting more people than ever,

https://www.nytimes.com/interactive/2024/09/30/climate/americans-moving-hurricane-wildfire-risk.html?smid=nytcore-ios-share&referringSource=articleShare

I very nearly posted this in “Other Investing” for the reason that these phenomena suggest a contrarian investment or long-range planning strategy. As a resident of MI I found myself quipping first to myself and then to others that soon enough the people who had flocked to Phoenix would soon be fleeing that cauldron in search of cooler weather. How about northern MI or the Upper Peninsula? Covid has already brought a flood of new work-from-home residents to attractive areas of this state. Property prices in desirable communities shot up, quite predictably. With the help of the Times article and graphics, one could identify areas of the country where land values might stand to rise as new residents flee disaster-prone areas (assuming they can sell their current properties) in search of some measure of comfort and safety. Buyers ought to consult the maps herein to identify dangerous area already feeling the negative effects of the previous overly enthusiastic migrations. I love Asheville, NC, but what’s about to happen to property values there?

Now the hard part of the strategy implementation: raising enough dough. Broad diversification could mitigate the risks of trying to target one or two promising areas (or individual properties), implying the big bucks available to private equity or pension funds. I don’t have that kind of $, but a whole lot of like-minded individuals working together might have a shot. I have Zelle and PayPay; please inquire (LOL).

BenWP

More alarming analysis from ProPublica on the issue of areas of the country that may see “abandonment.” I feel like a Cassandra, at least judging from the deafening silence greeting my previous post.

https://www.propublica.org/article/climate-change-migration-hurricane-helene

“Researchers now estimate tens of millions of Americans may ultimately move away from extreme heat and drought, storms and wildfires.” People moving from one part of the country to another, especially under duress, may create an investable opportunity or else I am lame-brained.

catch22

Hi Ben, Some folks in Michigan have been aware, for many years, about what and where climate might affect where folks choose to live long term or eventually. I'm not writing about climate change, but what have been existing conditions; and likely now becoming more impacted by changes in climate conditions.
We've had several long time friends (high school) who moved to Arizona for business purposes (35 years ago); when the melt down in the auto sector in Michigan really started to impact all business. The entire extended families were all business oriented, and found great success in business from the 'boom' of folks moving to the greater Phoenix.
A best friend eventually became a property assessor for several real estate firms. He's very smart about all things financial, and of course; continued to watch the increasing real estate prices..........until the market melt in 2008 for a few years. They moved around the greater Phoenix area a few times and always made money upon the sales of their homes.
Through all of those years we mainly discussed 'how will all of these these folks continue to have enough water'? Water is the most important, IMO.
Anyway, they retired; and moved back to Michigan, and a community near where they were kids. Their real estate dollars went a long way in Michigan. Although this state has to be concerned with some violent summer storms and a tornado here and there; we don't have hurricanes, extreme hot weather and other destructive weather events that are long term for repairs.
If one (older folks) can tolerate some periodic periods of very cold weather; the state generally has a pleasant climate, AND we have a lot of potable water. There are numerous communities and various locations to suit most folks of all ages and incomes.
Employment opportunities ebb and flow, as with most states. Healthcare and educational levels are generally of high quality. 'Course, when one considers traveling from metro Detroit to the Keweenaw Peninsula in the U.P., to every compass point in between; the choices for lifestyle and employment are fully varied. I/us at this household are able to offer a decent compare; as we have travelled other areas of the U.S. There are many wonderful places in this country.
It would take one a lifetime to explore all that Michigan has to offer.
Take care,
Catch

AndyJ

"With the help of the Times article and graphics, one could identify areas of the country where land values might stand to rise as new residents flee disaster-prone areas (assuming they can sell their current properties) in search of some measure of comfort and safety."

Who's going to buy in places like the "big bend" of Florida (major hurricane tracks have been converging on that chunk of real estate), the hellscape of s. AZ, Las Vegas, etc., that's the question. At some point, the answer's going to be nobody, and a whole lot of people will find out they waited too long. Major disaster ... and no way they can ever be made whole.

Plus we really don't know what's in store for the places we seem to think are at least somewhat immune. Western Oregon, for example, where I worked in the woods long ago, when the forest was wet nearly the entire summer, has been hit with major wildfires in the past half-dozen years; only within a few miles of the Pacific appears to be semi-safe, and that could be just a temporary reprieve.

Note that the W. OR territory I mean is not shown as disaster-prone on the NYT map, nor is the hot country of most of central and eastern Oregon. Other head scratchers include why Del Norte Co., CA, is less disaster prone than the adjacent part of SW Oregon. Maybe there's something about how very recent climate developments are weighted.

BenWP

I agree with your points, @AndyJ. I doubt there is any way to cherry-pick areas that may be “safer” than others; I would make a parallel between that strategy and trying to pick one or two stocks in hopes of an outsized gain. In order to benefit from folks and businesses being forced to abandon “unsafe” places you would need a massive amount of capital with which to buy land or businesses in areas that are possible areas of refuge/growth potential, I could not do it myself, nor could most small entities. You are correct that no one would want to buy in a disaster-prone, unless such a person/fund employs a “blood-in-the-streets” buying strategy, hoping the hard-hit area can bounce back and protect itself from another disaster. I doubt any of us as individuals would be able to tie up our money in real estate recently having plunged in value. It may be that big machers with the help of cutting-edge research could profit from purchasing a diversified portfolio of assets picked with the intention of benefiting from change. Unfortunately, the whole idea may have a whiff of taking advantage of “the misery of others.” I suspect many of us might be repelled by that. This notion might be akin to our admiration for the longs who succeed and our revulsion at the shorts who profit (speaking for myself).

hank

Spent about a week near Asheville NC in the spring 2-3 years ago. Lovely mountains. Lots of trout streams. Never dreamed a hurricane could devastate the area the way Helene has. Poor souls. The small town I stayed in was not prosperous. I don’t know if that’s typical of the larger area.

Profit from people moving to disaster prone areas? Maybe short Berkshire? They own lots of insurance.

(You first.)

BenWP

@hank: we had a really lovely stay in Asheville last fall, going on wonderful hikes in surrounding mountains, etc. Fall colors are great and contrast with Michigan’s because there is a greater variety of trees there. The history of lumbering in the area is quite fascinating, with Vanderbilt establishing a forestry school (now restored) for wealthy Easterners to come learn the industry. Our plan was to return next Spring to see all the magnolias and lilacs in bloom, attend final year events at our daughter’s med school as well as a wedding near Asheville. The graduation is not imperiled, but not sure about anything planned in western NC. My niece has two horses just south of Ashville where the property is under water. Her horses have taken refuge on a small patch of higher ground and look quite miserable staring across a new body of water.

Property in your area may be a better bet than anything in a disaster-prone area. I think these days one starts a Go-Fund-Me and asks for donations. You seed it, then ask the members here to kick in the big bucks. We’ll let you keep a management fee and we promise not to die in the next 25 years it may take for the enterprise to turn a profit. What could go wrong?

hank

Thanks @BenWP for deciding to add this thread to OT. Allows more latitude of discussion. Glad you have enjoyed time in Asheville. I got to Cherokee one day and like you did some serious hiking. I don’t know why G- - didn’t put waterfalls closer to major highways! Almost had a trip back planned for this fall, but changed destinations - good thing.

BTW - The Apps are impressive flying over even at 35,000 feet. I guess it was viewing them sometimes in route to Fla. that eventually caused me to want to visit. This last trip I flew to Charlotte and picked up a car. About 10 years ago I drove to W. Virginia from Michigan. But really prefer flying.