Understanding the Complex Dynamics of Coastal Housing Markets: An Overview of C-HOM

C-HOM, a comprehensive model that combines elements from theoretical, numerical modeling, and empirical literature in economics, finance, nonlinear systems, and coastal processes, is providing insights into coastal real estate dynamics in the face of climate change. By linking housing purchases to the flow of coastal amenities and risks, C-HOM introduces dynamics that are impacted by changing physical environments and broader economic conditions.

The model incorporates feedbacks in the coupled human-natural coastal system, agent-based modeling to capture nonlinearities and heterogeneity, flows of amenity values and climate risks, and empirical valuation studies in environmental economics. It also reflects the impact of public investments in adaptation and risk mitigation on real estate prices.

Key components of the model include the user cost of housing, willingness to pay for coastal amenities, risk premiums, expected capital gains, and shoreline management decisions related to beach nourishment. Agents in the model evaluate property values based on the flow of housing services, amenity values, climate risks, and expectations of future returns.

The model is designed to capture the behaviors of both owner occupants and outside institutional investors, who play a role in determining market dynamics. By incorporating complex interactions between human decisions and natural processes, C-HOM provides a holistic view of coastal real estate markets and their responses to climate change.

This innovative approach to modeling coastal real estate dynamics sheds light on the complex interplay between economic incentives, environmental risks, and human behavior. As climate change continues to impact coastal communities, tools like C-HOM offer valuable insights for policymakers, researchers, and stakeholders working to address the challenges of coastal development in a changing world.