Buyers Are Paying a Smaller Premium for Waterfront Living

Waterfront home price premium drops 18% since 2012

By Jeff Sorg, OnlineEd Blog

(July 20, 2018)

(SEATTLE) PRNewswire- 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, according to a new Zillow® analysis. 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.”

Markets with the Highest Premium for Waterfront Living

Metro Median Value of a
Waterfront Home
Average Sales Premium
for Waterfront Homes
Since 1996
Share of Homes that
are Waterfront
Homes
Jacksonville, Fla. $ 633,700 72% 0.27%
Cleveland, Ohio $ 463,100 68% 0.12%
Denver, Colo. $ 843,100 52% 0.04%
Baltimore, Md. $ 361,300 52% 0.04%
Milwaukee, Wisc. $ 569,800 50% 0.32%

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.

Metropolitan Area Median Value of
Waterfront Home
Average Sales Premium
for Waterfront Homes
Sold Since 1996 (%)
Share of Homes
That Are
Waterfront Homes
United States $ 426,300 41 0.47%
Atlanta $ 644,800 34 0.08%
Austin $ 572,500 42 0.16%
Baltimore $ 361,300 52 0.04%
Boston $ 463,700 11 0.06%
Charlotte $ 697,600 41 1.03%
Chicago $ 279,000 21 0.21%
Cincinnati $ 166,600 5 0.04%
Cleveland $ 463,100 68 0.12%
Columbus $ 372,300 41 0.10%
Dallas-Fort Worth $ 410,300 41 0.08%
Denver $ 843,100 52 0.04%
Houston $ 364,000 35 0.30%
Indianapolis $ 493,000 42 0.16%
Jacksonville $ 633,700 72 0.27%
Kansas City $ 379,000 31 0.09%
Los Angeles-Long Beach-
Anaheim
$ 2,018,200 14 0.05%
Memphis $ 398,300 6 0.08%
Miami-Fort Lauderdale $ 369,300 38 5.86%
Milwaukee $ 569,800 50 0.32%
Minneapolis-St. Paul $ 483,500 32 0.13%
Nashville $ 381,300 22 0.08%
New York / Northern New
Jersey
$ 665,700 26 0.18%
Orlando $ 357,600 27 0.70%
Philadelphia $ 185,400 9 0.03%
Phoenix $ 413,600 29 0.11%
Pittsburgh $ 153,300 -11 0.04%
Portland $ 625,900 24 0.22%
Riverside $ 446,200 25 0.38%
Sacramento $ 763,100 47 0.35%
San Diego $ 1,014,800 27 0.72%
San Francisco $ 1,175,000 8 0.48%
Seattle $ 1,024,300 47 0.66%
Tampa $ 496,200 39 3.31%
Virginia Beach $ 487,700 36 0.97%
Washington, D.C. $ 469,500 30 0.13%

Zillow is a registered trademark of Zillow, Inc.

 

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Jeff Sorg is a co-founder of OnlineEd®, a Web-based vocational school founded in 1997 where he also serves as Corporate Secretary, Chief Operating Officer, and School Director. Sorg holds vocational instructor licenses in Oregon, Washington, California, and Nevada and has authored numerous pre-licensing and continuing education courses. Sorg was awarded the International Distance Education Certification Center’s CDEi Designation for distance education in 2008.

OnlineEd® provides real estate, mortgage broker, insurance, and contractor pre-license, post-license, continuing education, career enhancement, and professional development and designation courses over the Internet.