AN INVESTMENT WITH A VIEW
by by Heather Buchanan

In classical Greek and Chinese philosophy, water is considered one of the four major elements which make up the universe along with fire, air and earth. Long revered in many religions as a symbol of emotions and wisdom, water is a key component of spiritual rituals from baptisms to baths. It is no wonder that we are drawn to water as it is what our bodies are mainly composed of. Visions of oceans, lakes and streams fill our dreams, and if you are lucky enough to make your dream a reality, find a place of your own with a waterview. Waterfront homes have become not just places for relaxation, enjoyment and family fun, but an incredible investment. A combination of historically low interest rates, a volatile stock market and foreign interest have driven up the real estate market in general and waterfront properties in particular.
By virtue of being a limited commodity, especially with state and local ecological preservation efforts, waterfront property benefits from a demand which exceeds the supply. Dan Hurley, editor of Second Home Journal says he expects, “another ten years of frantic activity” due to more buyers than product. The appeal of waterfront homes includes the desire to have a vacation in your own back yard, the rental income potential, and for many, the option to turn what may be bought as a second home into a retirement retreat. Kent Rydberg of Corcoran Group Realty in Westhampton Beach, Long Island sold a home in Sag Harbor on the water with a dock and a pool to a client two summers ago for $875,000 and it’s now worth $1,875,000. “My client bought a recreational home he loves and enjoys and has made a million dollars on his investment. You can’t beat that.” Kent Rybergh Corcoran Group Westhampton Beach, Long Island 631.228.6900
Part of the increased demand is demographic. “As boomers become empty nesters, they’re looking for ways to spend their leisure time,” says Ellen Roche, vice president of research for the National Association of Realtors. This drove vacation home sales 20% higher in 2004. Waterfront, and not just ocean or bay front, but rivers and canals are all appealing to buyers who want to find a place to de-stress, relax and take advantage of boating or other activities. Maureen O’Grady of Rachel Thomas Associates in Essex, Connecticut explains, “About 60% of our waterfront homeowners are boaters who can keep their boat at their own deepwater dock or take advantage of the area’s incredible marinas both on the coast and in the mouth of the Connecticut River.” Maureen O’Grady of Rachel Thomas Associates Essex, Connecticut 860.767.8635
Proximity to a major city increases the value of waterfront property. Anne Arter of Daniel Gale Real Estate covers the New York City suburbs of Port Washington, Sands Point and Manhasset and saw their office close on the highest waterfront sale in Sands Point at $17,500,000 for “Lands End,” a 13.3-acre estate on Long Island Sound. “Because of the lack of inventory of these very special and priceless residences, I don’t see the demand c hanging,” says Arter. “I can only predict that the value will continue to rise.” Anne Arter of Daniel Gale Real Estate 516-883-2963 Kent Rydberg who has lived and worked on Long Island’s East End since the ‘60s explains the value curve on waterfront has always been there--it’s just steeper now.
Many waterfront resorts which started as summer retreats have morphed into year-round communities. Judy Chace of Residential Properties points out Newport, Rhode Island’s year-round social calendar and cultural activities as a draw for home buyers. “Now you come in spite of the summer instead of just for the summer.” She explains that waterfront has appreciated incredibly in Newport but still remains a value compared to other resort communities. One gentleman who was in Newport looking for a boat, saw one of Chace’s properties and bought it on a whim, citing that a $4 to $5 million house in Newport would have been at least $10 to $15 million in another market. “It’s better than having money in the bank,” says Chace who has seen families who purchased homes for $100,000 now sell them for $4 to $6 million. Judy Chace Residential Properties Newport, RI 401-788-9300
Technological advances have created a whole class of telecommuters who can conduct business from their home office, looking out on a beautiful vista instead of sitting in a city high rise. Maureen O’Grady in Essex has seen an increase in waterfront home owners who commute into their office only one or two days a week. This influx of more full time residents has contributed to an Essex waterfront property bought seven years ago for $600,000, worth $2.6 million in today’s market.
The internet has also changed the real estate business itself where e-marketing allows potential buyers from all over the world to look at and evaluate properties electronically. Surfing the MLS or Multiple Listing Service has become a major pastime for potential investors. Tax benefits also augment the appeal of real estate with exemptions for the gains of sales of homes, deduction of home-equity loan interest, historic preservation credits and mortgage interest deduction. And as they say, you can’t live in your stock portfolio.
Tim Ritchie of Richland Homes in Annapolis, Maryland knows that in the building business, when clients see a strong appreciation on their custom waterfront homes, it makes him look good. He helps baby boomers “make their dreams come true,” utilizing his expertise in environmental regulations and the permitting process. While he deals in the high end of Annapolis waterfront where his custom homes are in the $2 million range, he also has an 80-unit development in Rock Hall, Maryland. A charming town, Rock Hall is a favorite with boaters, having 2,000 marina slips and duplexes and single family homes a block from the water in the far more reasonable $200,000 to $300,000 range. Tim Ritchie of Richland Homes in Annapolis, Maryland 401.647.3525
For a destination like Block Island which has seen nearly 20% yearly appreciation in its waterfront, its natural beauty and preserved land are both its appeal and the reason for limited inventory. Cynthia Pappas of Sullivan Real Estate explains her clients love of island living saying, “You’ve left your cares behind on the mainland and can enjoy the slower pace of life.” Even though it is easily accessible to both Boston and New York, Block Island remains a world away. Cynthia Pappas of Sullivan Real Estate Block Island, RI 401-466-5521
Just as there has been an influx of foreign investment in the U.S., Americans are seeking out prime waterfront locations in international waters, especially the yachting mecca of Tortola in the British Virgin Islands. Mr. Yonaho Leslie of the Lambert Group is marketing the development of the Elizabeth Beach Resort with both vacant land and villas available at a comparatively reasonable rate. The villas range from a studio for $110,000 to a four bedroom house with private pool for $1,500,000 expected to be completed at the end of this summer. Mr. Yonaho Leslie Lambert Group Tortola 284.495.2877
“Being on water is an ever-pleasant reminder that you are part of Mother Nature,” says Kent Rydberg. Science has proven that there is actually a bio-chemical reason why people feel their mood lifted when they are by the water, namely an increase in negative ions caused by the moving water. Research has concluded that negatively charged ions have positive effects on living organisms and where they are found in larger numbers, they speed up oxidation of serotonin to elevate mood while reducing pollutants and bacteria. This ionization process which occurs where water meets land has been shown to have positive benefits ranging from reducing anxiety to increasing appetite to heightening sex drive.
Perhaps the most priceless component of any waterfront compound is the memories it provides for a lifetime. And in terms of future appreciation, Tim Ritchie of Richland Homes sums it up saying, “They’re not making any more waterfront property.”