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How Water Attracts Real Estate…

The most important factor for real estate values is location, first and foremost. And historically, the #1 location that supports the highest property values is next to a large body of water, such as an ocean, lake, river, stream, or wetlands region.

Few places around the USA have higher priced homes than those located on a sandy beach or next to a bay or harbor.

Ironically, water also causes the most damage to real estate due to flooding, mold, and storms. Nationwide, water causes more property damage than fires or any other form of internal or external damage. As such, water can be a property’s best ally or worst foe.

Water Attracts People

Per the National Oceanic and Atmospheric Administration (NOAA), over half of Americans live in just 10% of the USA’s total land area (excluding Alaska) situated in shoreline adjacent counties.

The NOAA statistics from 2012 include the following data:

  • 52% of the nation’s total population lives within coastal counties.
  • 50.9 million: The estimated number of population increase (40% +) in coastal U.S. counties between 1970 and 2010.
  • 319 was the estimated population density per square mile (640 acres) in coastal counties, while it was just 61 people per square mile for inland regions.

Water Attracts High Prices

Malibu house

The priciest U.S. markets are on or near the ocean.

According to various surveys and median price reports (such as this one from Yahoo.com: America’s 20 Most Expensive Zip Codes – July 9, 2015), the bulk of the priciest zip codes regions nationally are located within counties adjacent to or fairly close to large bodies of water like the Pacific or Atlantic Oceans.

The zip code region of 11962 (Sagaponack in the Hamptons region of Long Island, New York) was ranked as the #1 priciest region in the United States. California led the way with the 14 of the top 20 priciest zip code regions.

Rank    Zip Code         Median Sales Price    City or Town

#1        11962              $5,125,000                  Sagaponack, New York
#2        94027              $5,050,000                  Atherton, California
#3        90210              $3,221,250                  Beverly Hills, California
#4        90402              $3,062,250                  Santa Monica, California
#5        94301              $2,827,500                  Palo Alto, California
#6        10013              $2,800,000                  New York, New York
#7        10007              $2,763,711                  New York, New York
#8        92662              $2,675,000                  Newport Beach, California
#9        33109              $2,650,000                  Miami Beach, Florida
#10      94022              $2,600,000                  Los Altos, California
#11      94028              $2,450,000                  Portola Valley, California
#12      93108              $2,400,000                  Santa Barbara, California
#13      10282              $2,400,000                  New York, New York
#14      92067              $2,350,000                  Rancho Santa Fe, California
#15      92657              $2,349,500                  Newport Coast, California
#16      11976              $2,337,500                  Water Mill, New York
#17      94024              $2,302,500                  Los Altos, California
#18      92661              $2,300,000                  Newport Beach, California
#19      90272              $2,240,000                  Pacific Palisades, California
#20      91108              $2,134,000                  San Marino, California

Water Attracts Extreme Weather

Underwater houseHomeowners should consider getting the best insurance coverage and damage protection strategies for floods, roof leaks, hurricanes, tornadoes, mold, and other issues related to water and weather.

For many, their primary home is their most valuable asset. This is especially true if the property is located somewhere near a scenic beach.

Top 10 Costliest Hurricanes in U.S. History
Hurricane Name     /     Regions Affected     /     Damage     /     Year

  1. Katrina / AL, FL, GA, LA, MS, TN  /  $47.424 Billion  /  2005
  2. Andrew / FL, LA     /     $23.349 Billion     /     1992
  3. Sandy / CN, DE, MA, MD, ME, NC, NH, NJ, NY, etc. / $18.75 Billion / 2012
  4. Ike / AR, IL, IN, KY, MO, OH, PA, TX /   $13.283 Billion   /   2008
  5. Wilma / FL      /     $11.885 Billion     /     2005
  6. Charley / FL, NC, SC /      $8.912 Billion     /      2004
  7. Ivan / AL, DE, FL, GA, LA, MD, NY, NJ, NC, etc. / $8.476 Billion / 2005
  8. Hugo / GA, NC, SC, VA, Puerto Rico / $6.957 Billion / 1989
  9. Rita / AL, AR, FL, LA, MS, TN, TX / $6.493 Billion / 2005
  10. Frances / FL, GA, NC, NY, SC / $5.478 Billion / 2004

(Source: 10 Most Expensive Hurricanes in U.S. History – CNBC.com (Oct. 3, 2013)

Water Attracts Population Increases

Almost 2/3 (200 million +) of the U.S. population lives within 100 miles of an ocean, partly due to desirable weather year-round. Since the priciest counties are usually adjacent to oceans, more people are moving inland to the closest adjacent county or state (e.g., Nevada, Arizona) for more affordable housing options, such as Riverside County, California.

Riverside is adjacent to three shoreline counties (San Diego, Orange, and Los Angeles), which are all on the Pacific Ocean. Texas and Florida are quite popular, since they are more affordable than California. These states also have some of the best U.S. beaches.

Projected Population Changes (1980 – 2020)

Largest Population Increases for U.S. Counties

1. Los Angeles, California – 2,625,824
2. Harris, Texas – 2,406,417
3. Riverside, California – 2,145,604
4. Orange, California – 1,720,934
5. San Diego, California – 1,614,287

Largest Percentage Increase

1. Flagler, Florida –             +1,038.46%
2. Osceola, Florida –               650.82
3. Fort Bend, Texas –              542.31
4. Matanuska, Alaska –          513.42
5. Sumter, Florida –                460.14
(Source: NOAA.GOV)

Few locations are more hypnotic and mesmerizing than those near the sea as observed in the quotes below:

“The sea, once it casts its spell, holds one in its net of wonder forever.”

– Jacques Yves Cousteau

“We are tied to the ocean. And when we go back to the sea, whether it is to sail or to watch – we are going back from whence we came.”

– John F. Kennedy

People are magnetically attracted to large bodies of water, partly because water makes up almost 70% of people and Earth. People who are fortunate enough to purchase investment properties or primary homes near an alluring sea, lake, river, or scenic wetlands can later find some of their best investment returns there “from sea to shining sea” in the land of America the Beautiful.

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About the Author...

Check out Rick’s new book The Credit Crisis: 10 Years and Counting (August 2017 publishing date) as well as The Credit Crisis Deals: Finding America’s Best Real Estate Bargains.

Rick Tobin has a diversified background in both the Real Estate and Securities fields for the past 25+ years. He has held seven (7) different Real Estate and Securities brokerage licenses to date. He also writes college textbooks and real estate courses in several states for some of the largest educational firms nationwide.

Rick has an extensive background in the financing of residential and commercial properties around the U.S with debt, equity, and mezzanine money. His funding sources have included banks, life insurance companies, REITs (Real Estate Investment Trusts), Equity Funds, and foreign money sources.

You can visit Rick Tobin at RealLoans.com.

Comments

  1. Robert V. Rodriguez says:

    Very useful source of information in order to ascertain information for future reference such as Homeowners should consider getting the best insurance coverage and damage protection strategies for floods, roof leaks, hurricanes, tornadoes, mold, and other issues related to water and weather.
    Thanks again
    Robert V.

  2. Bill H says:

    Interesting article and analysis of why water attracts people.

    Having gone through Georges, part of Ivan, Isaac, and Katrina to name a few.

    I guess water does attract as we moved back to the coast.

  3. Eliza Cranston says:

    Thank you for posting on the way water attracts people to a property! I live in a landlocked state but I’ve noticed that lakeside property definitely attracts more investors. I’m looking at a property that is next to a river, and I’m wondering how that compares to large bodies of water. Does a river add significant value to a property?

What do you think? We would love to hear your opinion.

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