• Nationally, waterfront homes are worth more than double of the value of homes overall.
  • The most expensive waterfront homes are in Hawaii, California and the coast of the Long Island Sound. The least expensive waterfront homes are in Florida and the Midwest.
  • The largest waterfront premiums are generally found in Florida and along the Great Lakes.
  • Nationwide, the premium paid for waterfront homes has increased over time, although it has fallen since the housing market peaked in 2007.

As the saying goes, they just don’t make waterfront property anymore. As a result, water frontage is very likely to boost a home’s value to some degree relative to non-waterfront homes. But this waterfront premium varies across the country, and it can be difficult to put a precise number on how much more home buyers end up paying for waterfront properties.

Using a database of more than 100 million homes nationwide, we have analyzed the single-family waterfront home market in the United States from 1996 to the present and have a developed a unique home value index for waterfront homes, nationally and the city-level. Waterfront homes are defined as those properties located on an ocean or lakes with a total combined size of 10 square kilometers (3.8 square miles) of surface area or greater. As a reference, Lake Sammamish in the Seattle metropolitan area is roughly 8 square miles in size.

We examine a number of market trends. First, we look at the nationwide difference in waterfront single-family homes versus all single-family home values over time. We then break waterfront trends down to the city level and explore where waterfront homes are most expensive and where the premium relative to non-waterfront homes is the greatest.

Top Cities by Waterfront Home Value Premium

Two decades ago, the median value of waterfront properties was 64 percent more than the median value of all homes. Today, the difference has grown to 116 percent: Waterfront homes are now worth more than twice that of all homes, as illustrated in the figure below.

Overall, the changes in value between waterfront and all homes show similar trends over time, with the values of waterfront homes being more exaggerated (both up and down) than the entire collection of single-family homes nationwide. At the peak of the single-family housing bubble in March 2007, the premium for waterfront homes over all homes reached 143 percent. Since then, the premium for waterfront homes has fallen: To 126 percent in February 2012 and to 122 percent as of the most recent analysis. From the peak of the single-family home housing bubble to the trough in February 2012, waterfront homes lost slightly more value (-27 percent) than did all homes (-21 percent). They have also recovered less quickly from the trough to the present: Since the trough, waterfront home values are up 17 percent, while overall home values have increased 21 percent.

We also looked at where waterfront homes are the least expensive. Leading the way is Holiday, Fla., with median waterfront home values of $103,000. Eight of the remaining nine cities with the cheapest waterfront homes are located in Florida, suggesting that potential buyers looking for the lowest entry point into the waterfront market should head to the lesser-known cities of the Sunshine State. Also making the list is Conneaut, Ohio, where Lake Erie water frontage can be had for less than $117,600.

There are substantial differences in the value of waterfront properties across the country. When we look at the top 250 cities by population, the most expensive waterfront homes are, perhaps unsurprisingly, in coastal California. Laguna Beach tops this list with a median waterfront home value of almost $10.1 million. Malibu, at $6.3 million, and Hermosa Beach, at $4.8 million, round out the top three. Other places with pricey waterfront home values include Kailua and Honolulu in Hawaii.

Top Cities by Waterfront Home Value Premium

Another interesting comparison is to look at the value of waterfront homes within a city compared to non-waterfront homes. The table below shows the top ten cities in terms of the waterfront premium – the difference between waterfront and non-waterfront home values within a city.

The largest waterfront premiums are in the Florida cities of Riviera Beach and Sarasota, with waterfront premiums of 1,154 percent and 1,132 percent, respectively. Other Florida cites – Tampa and Lake Worth – also make this list, as does Laguna Beach. Calif., the city with the highest overall waterfront values. High waterfront premiums for single-family homes are also found in Dartmouth, Mass., and Kailua, Hawaii.

Other cities on this list are more surprising. Large waterfront home value premiums can be found in Gary, Ind., (790 percent), Holland, Mich. (647 percent), and Grand Haven, Mich. (587 percent). These three cities, located along the Great Lakes, see their premiums benefit from relatively low non-waterfront home values within their boundaries. Within all 10 of these cities, buyers looking to locate along the water must pay a hefty premium over non-waterfront homes in the city.

Waterfront living can bring noise, floods and other headaches with it. As a result, not all cities show incredibly large premiums for waterfront. Examples of smaller waterfront premiums can be found in Spring Hill, Fla. (8 percent), Warwick, R.I. (24 percent) and Jacksonville, Fla. (32 percent).

Waterfront living is a great lifestyle, but does come at a premium.  When looking for real estate, keep this in mind.  Waterfront properties have been proven to be more valuable in the long run and not only would make a great setting for a home, but a great investment for the future.

By Andy Krause on Sep. 11, 2014 – MyersLakeland.com – Myers Lakeland Blog is part of Century 21 Myers Realty that offers real estate services in Lakeland, Florida and Central Florida. We encourage you to share our content!