Major cities are not alone in feeling the effects of climate change. Small vacation towns are starting to get the brunt of sea-level rise—as evidenced by one home listing in Nantucket, Massachusetts. 

In September 2023, a three-bedroom, two-bath waterfront home in Nantucket—a “beautiful seaside retreat” as described by the sellers—was listed at $2.3 million. Looking at the comparable homes in the area, it was somewhat of a steal. Some listings in the area are as high as $8.2 million, according to Zillow. But after a few months on the market, the price plummeted a whopping 74% to just $600,000—well below Nantucket’s median home sales price of $3.2 million. 

During the past two years, we’ve heard nothing but news of home prices increasing, so how could such a seemingly desirable property lose so much value so quickly?

Climate change is to blame. The shoreline surrounding the home lost 70 feet due to erosion in just a few weeks, according to a Boston Globe report. While the 2,625-square-foot property was located at what’s long been considered a prime location in Nantucket, its value was completely washed—literally. While Florida, California, and Texas are primarily the focal points of how climate change is impacting housing, other coastal areas and islands like Nantucket are in danger.

“As sea levels continue to rise, we’re also seeing land areas sink, both due to the increased temperatures from human caused climate change,” Kathleen Biggins, founder and president of non-partisan climate change education organization C-Change Conversations, tells Fortune. “This heavily impacts coastal areas, especially as they become either uninsurable or extremely expensive to insure, because the risk of damage is just too high for market tolerance.”

Despite the risk of future damage, longtime Nantucket visitor Brendan Maddigan, who lives in New York, submitted an all-cash offer in February for the property when he saw the incredible price drop, according to the Globe. 

“The home is amazing. The location is amazing,” he said. “And the price mitigates the risk to a good degree. I’d like to think that it’ll be there for a while, but I was definitely aware of the risk of any particular storm causing a problem in the future.”

The risk in buying coastal properties

Vacation homes are meant to be an oasis, but that doesn’t mean they’re immune from the effects of climate change. Indeed, vacation destinations like Nantucket are typically located in “environmentally sensitive areas” and are likely to be the first communities significantly affected by climate change, Biggins says.

That “will definitely lead to fluctuating property values as the risks and impacts become more evident,” Biggins says. “Millions and millions of people live and work in coastal counties, and will be severely impacted by the effects of climate change over time.”

Not only is there inherent risk in purchasing coastal properties that could lose value, but many of these climate-change ridden communities are uninsurable. Indeed, a recent ValuePenguin survey showed more than one in four American homeowners with insurance worry their homes will become uninsurable in 2024—and 72% of home-insurance policyholders reported rate hikes in 2023.

“Climate change goes well beyond the weather in choosing a home,” Tracy Ramsay, a RE/MAX Results real-estate agent, tells Fortune. “In addition to thinking about comfort, climate change can drastically affect your housing stability—as well as your wallet.”

For the wealthy, it can be nearly irresistible to purchase vacation homes—ones with “an ocean backdrop or rolling hills with vineyards,” Ramsay says. “You can’t help dreaming of living an idyllic life in such a setting.” 

But the harsh reality is that many of these homes are too “unstable” or even dangerous to live in, Ramsay says. Those who have extra cash to burn may not be too concerned with rebuilding or refurbishing their homes if something were to happen, but without insurance the cost can become insurmountable. 

“Even the wealthy will have their tipping point and will flee if the inconvenience and danger become too much,” she says.

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