Metric tons of fish, manatees, and turtles washing up on shore. Inedible shellfish. Watery eyes, irritated throat, and coughing in residents and visitors. All from a harmful algae bloom, commonly referred to as red tide. This is not an excerpt from a science fiction novel, it is a regular occurence that communities all along the Gulf of Mexico experience. This toxic algae, although naturally occurring, has been getting supercharged by the water runoff filled with fertilizer and effluent, which appear to be leaking into waterways on a much more frequent basis. The stench and discomfort may lead homeowners and investors to question whether these markets should be something to avoid, similar to the sea-level rise issues in Miami.
What is red tide?
Red tide, Karenia brevis, is a type of algae common in the shallow waters of the Gulf of Mexico. Although it is a naturally occurring organism with records that date back to the early 1900’s, human inputs can fuel the growth and cause explosions in the populations. Nitrogen and other elements common in fertilizers feed the algae, which are aquatic plants, the same way it feeds our lawns and yard plants. With heavy rains in the summer, the fertilizers widely used in both commercial and residential capacities are washed into the waterways. When this food source meets the warm water and naturally occurring algae populations, you get a perfect storm. Red tide, so named because of the reddish coloration the water takes on when concentrations are high, can cause respiratory or skin irritation and kills fish in high concentrations.
How does it impact real estate?
Market analysis from realtors living in these communities has found that in years of bad events, the coastal communities can experience nearly half a billion in lowered property values and can see stagnating sales while areas that are unaffected experience 10% increases in sales prices.
On the flip side, there are many real estate professionals who believe red tide is not affecting sales. During an extreme red tide event in the greater Sarasota area back in 2018, pending sales increased 2.3% from the year before when there was no red tide. This could be due to the fact that most people are not affected when indoors, it is not in high concentrations year round, it typically only lasts a few weeks to a few months, and it moves, so one year it may be near Sarasota and the following year up by Tampa Bay. The inconsistency and infrequency can be justifiable to someone who is looking to move south to avoid the long cold winters, for example. Shoveling snow for four months out of the year every year is far worse for many residents than the possibility of a few weeks of mild irritation only when outside near the water.
Which real estate markets are affected by red tide?
Red tide occurs in the nearshore waters of the Gulf of Mexico, so coastal communities from Florida to Mexico can potentially experience these blooms. Waterfront communities will be affected more than inland ones depending on the concentrations and direction of the wind.
Residents and visitors may experience an irritated throat, coughing, runny nose, watery eyes, and skin irritations depending on sensitivity and how severe the bloom is. It is recommended that people who have asthma, emphysema, COPD, or other chronic respiratory illnesses avoid being outdoors during red tide events. It can certainly deter would-be residents from these areas when they know it’s likely they’ll have to remain indoors for weeks and sometimes up to a year while a red tide bloom is in the area.
Although we all tend to jump immediately to residential home sales, certain types of commercial real estate can be dramatically affected by red tide as well. Hotels, motels, and other temporary lodging can be hit even harder than residential homeowners. Not only can the physical property decrease in value but the business itself will be negatively impacted since fewers tourists come for a visit. Restaurants, bars, shops, water sports, and other service industries are in the same boat. They see a decrease in patrons from the tourist crowds as well as locals. You can’t really blame them when they can’t enjoy local establishments without coughing and smelling dead fish.
All in all, red tide doesn’t appear to be killing Gulf Coast real estate, but it certainly can negatively impact sales and business when there’s an active bloom in the area. Although red tide cannot be precisely predicted, it is closely monitored. The Florida Fish and Wildlife Conservation Commision posts weekly updates on karenia brevis concentrations across the state of Florida, with other states having similar programs. If you’re thinking of selling your residential or commercial property, in order to get top dollar, you may want to temporarily sit on it while there’s an active bloom in the area. But rest assured that red tide ebbs and flows just like the tides flowing in and out of these coastal communities — and that means the same applies for its effects on the real estate market.
Unfair Advantages: How Real Estate Became a Billionaire Factory
You probably know that real estate has long been the playground for the rich and well connected, and that according to recently published data it’s also been the best performing investment in modern history. And with a set of unfair advantages that are completely unheard of with other investments, it’s no surprise why.
But those barriers have come crashing down – and now it’s possible to build REAL wealth through real estate at a fraction of what it used to cost, meaning the unfair advantages are now available to individuals like you.
To get started, we’ve assembled a comprehensive guide that outlines everything you need to know about investing in real estate – and have made it available for FREE today. Simply click here to learn more and access your complimentary copy.
The Motley Fool has a disclosure policy. Editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Editorial content from Millionacres is separate from The Motley Fool editorial content and is created by a different analyst team.