Premiums Paid for Waterfront Homes in U.S. at Lowest Levels Since 2002
According to new market research by Zillow, the premium for living on the water isn't as high it used to be. Homes along the water sold for a 36 percent premium in the first quarter of 2018. The extra cost for waterfront living is at its lowest level since the second quarter of 2002, and below the average premium since 1996 of 41 percent.
Across the country, waterfront homes tend to have higher prices than similar homes in the same area, but the gap has closed over the past several years. The typical U.S. home has more than recovered from the recession, but waterfront homes have not.
Zillow defines waterfront homes as those where the homeowner can get to the water's edge, whether it is a lake, river, or ocean, without leaving their property. This analysis compares sale prices for waterfront homes with homes in the same metro that have similar physical features, but do not have waterfront access.
"Buyers are willing to pay extra for features that add a unique benefit to a home, and being right on the water's edge is one of them," said Zillow Senior Economist Aaron Terrazas. "These homes are relatively rare, making up only a small portion of the housing market, and that scarcity keeps prices high. With inventory as low as it is, buyers are spending more just to get into the market, which has narrowed the gap somewhat between waterfront homes and inland homes. Still, having waterfront access is incredibly appealing for many buyers, and even as environmental risk factors like rising sea levels and storm surges gain more attention and make some buyers more cautious in the homes they consider, the premium for waterfront homes is likely to endure."
Waterfront properties are most valuable in Los Angeles, where the typical home on the water is worth $2,018,200. In three other West Coast markets - San Francisco, Seattle, and San Diego - the median value of a waterfront home is also above $1 million.
Buyers looking for a waterfront home will have the most options in Miami, where 5.9 percent of all homes offer waterfront living.