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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

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
Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with great real estate professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow Group's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

 

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