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 all of us put together that makes 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.
The reason for maximum 30-year loans on homes is that the value of a dollar 30 years from now approaches zero and thus has no value to a lender. This became apparent during the 2007–09 housing crisis, when refinancing to a 40-year mortgage could not help those in over their heads in housing debt, as it changed monthly payments only by pennies. So the market tells us about home values over the next 30 years. And if the market (we) believed in global warming and rising sea levels, there would be no market for loans on oceanfront property at any interest rate.
James L. Swofford is a professor of economics in the Department of Economics, Finance, and Real Estate at the University of South Alabama