Sell Your Beach House

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After completely devastating the Bahamas and teasing the entire southeastern coast of America with destruction, Hurricane Dorian made landfall in North Carolina today. That reminds me: sell your beach house.

Specifically, your beach house located on the southeastern coast of America, or in the Caribbean. Sell that shit quick.

The world’s financial system is based, at its core, on faith. People have faith that the currency in their pocket will be easily exchanged for goods and services, and they have faith that the investments they make today will pay off in the long run. To “drill down” on this point a bit, they have faith that when they spend a lot of money on the beach house, they will be able to enjoy that beach house for a long time, which implies that it will not be flooded out or swept away or otherwise wrecked and rendered useless by climate change-driven storms and rising seas.


Is that assumption true? Um.

The more cynical view of the long-term faith that people have in economic systems is the Greater Fool Theory. It doesn’t actually matter if the investment you make today is “good” in its economic fundamentals; what matters is that you can find a greater fool than yourself to sell it to. As long as the greater fools are still floating around out there, you can always get out from under. But one day, the last extant greater fool disappears, and nobody can sell their worthless crap, and then you have a huge financial crisis. This happens routinely in cycles, and then we all vow never to do that again, and then over time greed rises, and we make the same mistakes, and it happens again.

The thing about coastal real estate in places like Florida is that it is quite possible that it will not gradually lose its value—rather, a catastrophic storm may convincingly make the point to the entire world that houses on the beach are not safe, and, more or less overnight, nobody will want them any more. So instead of the value of your beach house going from $500K to $450K, it will go from $500K to “the scrap value of your copper pipes.” Had Hurricane Dorian tracked just a bit more to the West, it could have scraped all the way up the southeastern coast, wrecking all beachfront real estate for hundreds and hundreds of miles across several states. We had Hurricane Matthew hit the east coast in 2016, and Hurricane Irma in 2017. Had Dorian hit hard, that would be three storms in four years. And then imagine one next year. And the next year. At what point do you think people will get tired of rebuilding and all decide to sell at once? And at what point do you think the pool of people considering buying a beach house in a hurricane-prone state will dwindle down to a number much, much smaller than the pool of sellers? That’s how you go broke, my friends.

Sell that beach house now, before all the greater fools smarten up. Beat the crowd. You can always rent.