Buyers Are Paying a Smaller Premium for Waterfront Living

Waterfront homes sold for a 36 percent premium in the first quarter of 2018; in the second quarter of 2012, the premium was 54 percent

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Zillow

Jul 10, 2018, 08:00 ET

SEATTLE, July 10, 2018 /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
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SOURCE Zillow