CHM Blog

Eroding Coastlines has Homeowners Panicking; A Peek into the Future for Coastlines Everywhere?

California historically tends to be the “test case” state for what other states may experience in the future. Whether it’s disclosure rules, contracts, or in this case, homeowners suing their state — especially in states where climate change is beginning to affect the beauty, safety, and property values inherent to the area — California tends to be among the first to raise issues.

The Hills Sharon Udasin reports that the fate of California’s coast may hinge upon the outcome of a contentious ongoing lawsuit in which a small group of homeowners is battling to build a sea wall that the state has refused to approve.

“Rising sea levels are threatening to eat away much of the state’s 1,100-mile shoreline, while potentially destroying many of the homes and businesses that have been built alongside it,” says Usadin, who explains how public beaches are being pitted against private property rights. “The resolution of a regulator-residential rift could help clarify who is allowed to shield their properties from this encroaching danger — and in doing so, make a far-reaching impact on the future geography of the state’s bluffs, beaches and coastal communities,” she says.

This lawsuit revolves around whether a cohort of bluff-side residents in Half Moon Bay — a city in San Mateo County about 20 miles south of San Francisco — should be allowed to build sea walls to protect their homes from the impacts of erosion. The petitioners applied in November 2018 to build a 257-foot concrete sea wall, as well as a public access staircase that would replace existing emergency boulders.

The Coastal Commission rejected the requests in the summer of 2019, instead authorizing a mere 50-foot sea wall for an apartment building. Now the homeowners have filed a lawsuit and the agency filed an appeal, extending the litigative mess. The homeowners as well as a judge who ruled in their favor, contended they had a right to protect their property under California law.

But coastal policy experts warn that building sea walls or other protective structures pose their own risks. Regardless, the fact remains that California’s coastline is rapidly eroding according to research oceanographers.

Usadin reports that just a single meter of sea level rise could drown a quarter of the California coastline, while a more extreme, 3-meter surge could wipe out three-quarters of these beaches according to recent studies.

“Separate research from California State University showed that not only might most beaches disappear, but their elimination could exacerbate environmental justice concerns,” she says. “For example, a meter of sea level rise in San Diego County could destroy more than a quarter of picnic areas, half of lifeguard towers and 15 percent of public restrooms along the coast.

Naturally eroding beaches maintain their width and retreat together with the shoreline — serving as a “buffer” between the ocean and the back of the shore. But when a sea wall interrupts this process, that movement changes. The beach itself has nowhere to go, and the presence of a sea wall may eventually make the beach disappear entirely. Experts acknowledge that these structures do have the ability to protect homes for a while, depending on the specific circumstances, but in the end, nature will take care of its own.

Are beach areas like this a sign of what’s to come in other coastal communities? Possibly. Experts looking at Google Earth are finding that the area is very much at risk of losing most, if not all, of its beaches. Asked if Half Moon Bay’s beach disappearance is inevitable, Usadin’s experts predicted that the combination of sea level rise and a permanent sea wall could make it so.

As for the homeowners, they have several tools at their disposal and won’t hesitate to use the legal system to further their interests. Property rights protections are guaranteed by California’s Constitution — and therefore it is questionable whether a state agency could compel landowners to relinquish those rights.

In the meantime, it will be in the responsibility of the courts to steer California’s coastal future as the threat of erosion looms. Which courts will assume that role, however, remains up in the air. In the end, it might be over who gets stuck with the bill.

As for other coastal areas battling with sea level rise projections over the next 80 years, like California, there won’t be a ton of accommodation space.

TheHill, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are getting some minor support today. The MBS market worsened by -34 bps last week. This may have been enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Central Banks, 2) Inflation and 3) GDP.

1) Central Banks: We get key interest rate decisions and policy statements out of the Bank of Japan, the European Central Bank and the Bank of Canada. None of the Central Banks are expected to change their rates during this round of meetings, the markets will be focused on any guidance as to when the BofJ will raise rates and the ECB will cut rates.

2) Inflation: We will get the Fed's preferred measure of inflation (Core PCE) on Friday along with Personal Incomes and Spending. The market is expecting the MOM pace to increase from the prior month. The hotter this reading is, the worse it is for bonds and vice versa.

3) GDP: We get our nation's economic report card for the 4th QTR. (aka GDP) It is expected to drop from 4.9% in the 3rd QTR to 2.0% in the 4th.

Treasury Auction: We have a week of shorter term notes with the 2, 5 and 7 YR note auctions.

This Week's Potential Volatility: High

This morning markets are getting a small boost without any economic data. Volatility has started at moderate levels but will likely spike with PCE and 4th quarter GDP later in the week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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