Waterfront home price premium falls in the US to lowest since 2002
People buying waterfront homes in the United States are paying less of a price premium than they were six years ago, a new analysis shows.
Waterfront homes sold for a 36% premium in the first quarter of 2018 compared to 54% in the second quarter of 2012, according to the research from real estate firm Zillow.
It means that 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%.
The analysis report says that 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 US home has more than recovered from the recession, but waterfront homes have not.
Zillow defines waterfront homes as those where the home owner 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. These homes are relatively rare, making up only a small portion of the housing market, and that scarcity keeps prices high,’ said Zillow senior economist Aaron Terrazas.
‘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,’ he explained.
The highest premium paid for a waterfront home is in Jacksonville in Florida at 72%, followed by 68% in Cleveland, 53% in Denver and also in Baltimore and 50% in Milwaukee.
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% of all homes offer waterfront living, the research also shows.