Waterfront: The Gold Standard in California Real Estate

Okay, you make a gazillion dollars a year and can live anywhere you want. Where do you live? Probably in a waterfront property in CALIFORNIA.

Here in California, we have a very long coastline, but guess what? Very little of it can be owned by private owners, because most of it has been preserved for public access. The same is true for our lakes. Although we have plenty of lakes, most do not allow waterfront homes.

Now we all remember economics 101: low supply equals high prices. And all around the state, the very limited supply of waterfront properties that exist come at a very steep price. Can you still get one for under a million? Yes, but not for much longer. In the more popular areas (for example Lake Tahoe and Santa Cruz), that option disappeared long ago.

This is one kind of property that will not be going DOWN in value, and will continue to appreciate as Baby Boomers vie for the best places to play.

A waterfront lot on a little-known lake 2 hours from the Bay Area was purchased in 2000 for $95,000. Today, even in a declining market, that same lot would fetch $500,000-$600,000.

I often find myself at odds with appraisers who fail to realize the subtle nuances of waterfront pricing. The most valuable waterfront is always "the point" meaning it juts out into the water giving shoreline on several sides of the property. "Deep water" carries a premium. This means the water does not recede from the property (so that you are unable to dock your boat). Being on "open water" is more valuable, than being on a channel, or at the back of a narrow cove.

And then there is sand. Everyone wants sand. A small level sandy beach, or "steps to the sand" as they say in beach lingo, will cause the price to be far higher. View also comes into play. View of whitecaps trumps view without whitecaps.

If you are waiting to buy your waterfront dream, prices will not be lower than they are today. Waterfront properties in California are quickly becoming the exclusive playgrounds of the rich and famous.