In June 2018, the total market value of waterfront properties was estimated around $134 billion. It is no surprise that waterfront properties are more likely to receive a better appreciation when compared to other real estate properties.
However, since the great recession in 2008, while most other properties witnessed a drop in sale value, waterfront properties remained more or less the same.
So, is it still worth investing in waterfront properties? Keep reading to find out the answer.
Image by David Mark
Inland Waterfront Real Estate Market
In recent years, climate change has dramatically affected the real estate market. Especially the market for waterfront properties.
According to a report, the sale price premium for waterfront properties declined from 53% to 34% over the last decade. Whether it is for the increasing number of hurricanes in the coastal region, or for the rising sea level.
However, this decline was mainly witnessed in beachfront houses. For they are more prone to environmental damages caused by salt, water, and storms.
On the other hand, the inland waterfront real estate market actually gained traction.
Lakefront vs Beachfront Properties
Inland waterfront properties usually constitute lakefront houses and establishments. As compared to beachfront or other waterfront properties, lakefront properties offer several benefits.
For example, they are easier to reach, more convenient for day-to-day living, and also pack tons of adventures. As the experts at Top Guns Realty opine, lakefront properties are befitting for vacation homes as well as family living needs.
It is also noteworthy that even during the recession period, it was the waterfront properties, excluding lakefront ones that suffered the brunt.
While other real estate properties bounced back from the recession, beachfront properties, in particular, are still to recover from the depreciation. Notably, the uprise of the landlocked properties received a dramatic appreciation in the post-recession world.
Calculating The Returns on Investment
According to several studies, the median value for waterfront properties is 116% higher than other types. So, evidently, when buying a waterfront home, you are more likely to pay higher.
However, paying higher could also mean that you gain more profits on your investment. According to a survey, on average people who sell out waterfront homes earn 9%-15% on their investment within a year.
Now, of course, there are several factors that affect this appreciation. For instance, the shore length, the activities available around the property, amenities in the neighborhood, all affect the pricing of a waterfront home.
It is noteworthy that houses that have fewer residential establishments in the immediate neighborhood are more likely to receive higher appreciation. And it has the least to do with the actual value of the property. For obvious reasons, people buying waterfront homes, wish to evade the hustle and bustle of crowded colonies.
To sum it up, waterfront properties are one of the best real estate investments available in the market. Especially, if you are looking to buy a second home.
And frankly speaking, these properties are more likely to appreciate over time as compared to any other real estate property.