Owning waterfront property can be a very rewarding experience, but is it worth the price? For true water enthusiasts the premium paid for the waterfront lifestyle is well worth it. Personally I can’t imagine living anywhere else and the lifestyle that we enjoy in NE Fort Lauderdale neighborhoods like Coral Ridge, The Landings, Lauderdale Beach and Bermuda Riviera is absolutely priceless. However, as prudent investors we must rationalize our lifestyle every once in a while, so please allow me to provide you with some thoughts about the true value of where we live.
Most of us who purchase real estate allow our emotions to enter the equation and this is especially true for buying a home on the water. Perhaps it’s the serene views over our protected waterways, or maybe it’s the calm canal breezes we enjoy beginning with the winter trade winds and ending with the water gently lapping at our docks. And then there’s the wildlife that shares our waterfront sanctuary; from the occasional manatee munching sea grass in the Intracoastal to the flocks of ibis grazing along the street, to the mullet splashing in the canal and the lone egret sipping water from our swimming pools. And for the boaters it doesn’t get much better then stepping out back to tinker with your favorite toy. For most of us this is all the value we need, but here are the facts anyway.
What is waterfront property really worth?
For starters, we’ve all heard the old saying “they just don’t make waterfront property anymore”. As demand for waterfront property increases and supply remains flat, we would expect waterfront prices to increase more than non-waterfront, which is exactly what has happened over time. According to a recent study by Zillow, the median value of waterfront property 2 decades ago was 64 percent more than the median value of all homes nationwide. Today, that difference has grown to 116 percent.
In our local market of Northeast Fort Lauderdale (East of US-1) the average premium for waterfront property since the peak is about 67 percent. This is great value when compared to all of Fort Lauderdale and Broward County which carry a premium of 116 percent and 168 percent respectively. The other good news is that our local waterfront market has recovered nicely from the bubble of 2007, almost keeping pace with the non-waterfront recovery. In contrast, other waterfront markets across the country have recovered less quickly, further demonstrating the relative strength of the South Florida markets. I suspect that as the recovery continues, especially for higher end homes, the median price increases of waterfront property will surpass those of our non-waterfront neighbors. Even if I’m wrong, at least we get to see a manatee every once in a while.