Are you interested in owning beachfront property? I was for many years, but no longer. Climate change is negatively affecting beachfront property. Water is also the most damaging element for homes. And as an investor, I don't want to take that risk.
Before you plunk a large chunk of change on a villa by the sea, it's worth understanding the downsides. The biggest problem with beachfront property is also what makes it so special: the ocean.
Real estate is my favorite asset class to build wealth because you can also enjoy it. Can you imagine making millions of dollars on your beachfront property while also living your dream life? I don't care how much stocks go up if you're never going to use the proceeds.
However, unless you are able to get a steal, beachfront property may have a more difficult time appreciating in the future.
The Aspiration To Own A Beachfront Property
Once I got my first job in 1999, I fantasized about owning an oceanview property. But I could not afford one, so I purchased a parkview condo in 2003 instead for about $580,000.
11 years and another home later, I was finally able to buy my oceanview property. At $1,240,000, it ironically cost much less than my no-view property at the time because it was a fixer.
An oceanview property is fantastic because living in one feels so peaceful. If you're facing west, you get to see a different sunset every night. As a writer, being able to zone out at an ocean has helped with creativity.
I highly recommend owning an oceanview property if you can get your hands on one at a reasonable price. Not only will you feel less stressed living in one, but you may also be able to make a strong investment return as well.
After enjoying an oceanview property since 2014, I began to fantasize about owning a beachfront property in Oahu. That's the hedonic treadmill for you. I figured, if oceanview properties provided so much tranquility just by seeing the water, then also hearing the water with a beachfront home surely would be even better.
Unfortunately, the cheapest beachfront home I wanted to buy near my favorite beach in Oahu was $10 million. Alas, it was too far out of my price range. But I went to investigate my dreams anyway.
Flying To Hawaii To Understand Beachfront Homes
Given everything I write on Financial Samurai is based on firsthand experience, I decided to take a business trip to Oahu to investigate beachfront homes for this article. From my trip, I was also able to write an article about my experience flying during a pandemic and what it was like flying on a United Boeing 777-300ER in the Polaris cabin.
I wanted to provide the latest color on flying during uncertain times so others who haven't seen loved ones for a long time can make a more informed decision. I'm pleased to report my flying experience was smooth and it felt safe. Please go see your loved ones if it's been over a year.
I touched down in Oahu at 2:45 pm, took a COVID test, and went to see my editor for an hour. After our meeting was done, I drove down to one of my favorite beaches in Kahala. On the beach was a 6,000 square foot beachfront home sandwiched between two 15,000+ square foot beachfront mega-mansions on two-acre lots.
The 6,000 square foot home was listed for $10 million on and off for 18 months. Back in 2015, the home was once listed for $15 million and then $12 million.
If I were to ever buy a beachfront home, this was it. My hope was that as its asking price continued to fall, my net worth could continue to grow until I could afford it.
The other beachfront homes were too big and would cost over $30 million if they ever came on the market. Maybe in the next life.
The Biggest Problem With Beachfront Property
When I got to the beachfront property, I was shocked. Over 300 square feet of its backyard had eroded! The lot was at least 30 feet wide. At some point since my last visit in 2019, the ocean had washed up and taken at least 10 feet inland worth of the lot.
Have a look at my investigative video yourself. In the video, I originally estimated only 50 – 100 square feet of loss because I was so surprised by what I had seen. Closer to between 300 – 350 square feet of land was lost instead.
The biggest problem with owning beachfront property is gradually losing your land to the ocean. And land is the most valuable piece of a property, not the building. The more the ocean reclaims, the less valuable your beachfront property gets.
There is only about 15 feet from one end of this home's crumbled yard to its pool and gazebo. If ocean waters continue to rise, which they seem like they will, within 20 years, this home might no longer have space for a pool. And in another 20 years, this beachfront home might not have a backyard at all.
I have been coming to this beach since my wife and I got married here in 2008. The erosion has been quicker than expected. I estimate this home has lost one foot of land a year!
Therefore, if you plan to buy a beachfront home, it's better to have as much land buffering your home from the ocean as possible. A single-family vacation property in the hills with ocean views seems like a wiser investment. Or, a nice condo vacation property at a resort.
Protecting Your Beachfront Property With A Seawall
You might logically conclude the simple solution to protecting your land from the ocean may be to build a rock wall or get some sandbags. I thought so too. This beachfront home could simply spend $100,000 – $200,000 to build a 10-foot high wall 30+ feet across. After all, the two neighboring mega-mansions already have.
However, the state of Hawaii does not allow homeowners to build seawalls to protect their property. I thought this was strange since a homeowner should have a right to protect their property. But according to scientists, erecting seawalls causes beach loss. And all beaches in Hawaii are public.
Further, state legislators argue if a homeowner chooses to buy a beachfront home, they should be aware of the risks. I don't want you or me spending millions of dollars buying a beachfront home only to lose it to the ocean. Hence, the main reason for writing this article.
Apparently, there is significant tension among local Hawaiians and beachfront property owners about their seawalls. Locals are blaming seawalls for quickening the erosion of beaches. At the same time, beachfront property owners are claiming hardship, especially if their neighbors have seawalls that are causing damage to their homes.
It's easy to side with non-beachfront homeowners on this one. It truly is great there are no private beaches in Hawaii. If they were, people like Mark Zuckerberg would buy up everything and shut locals out.
Below is an image of a seawall and the strength of the ocean in Lanikai. There used to be a beach a couple decades ago, but no more.
Hardship Exemptions Are Being Made
Despite it being illegal to erect seawalls, hardship exemptions are being made. Here is a fantastic article from Propublica that highlights the debate. The article, with its lovely pictures, reports that 46 homeowners have been granted exemptions to be able to build seawalls over the past couple of decades.
Therefore, there still is a chance a beachfront property owner can build a seawall to protect their property. When doing your purchase calculations, figuring out the likelihood of getting an exemption is extremely important.
If you don't think you can get an exemption to build a seawall, then you need to calculate a drag to your property's appreciation rate. You may have to just be OK with the property not increasing in value at all.
On the other hand, if you can build a seawall, then your property should at least outperform the price appreciation rate of other beachfront properties. But eventually, rising ocean levels will reclaim more land, whether there is a seawall or not.
Here on the western part of San Francisco, supposedly the beach extended 26 miles further west into the ocean 17,000 years ago.
Take a look at the Obama's beachfront estate at Waimanola. It is massive compared to its neighbors. Notice how the water goes right up to the wall. The Obamas were able to get an exemption to build a seawall. However, given none of us have ever been the president, I wouldn't count on getting a similar ruling.
More Problems With Owning Beachfront Property
The ocean might not reclaim your land, but the wind and ocean spray will cause damage to a beachfront home. Here are more problems with owning beachfront property:
You must purchase more expensive materials to protect your home from wind and saltwater. We're talking about the highest quality doors, windows, fixtures, and paint.
In addition, you must replace your doors and windows more frequently. Poor quality windows will fail more easily due to the constant pounding of wind, rain, and saltwater. Moisture will likely seep into windows easier and fog them up. Doors will rot and decompose easier.
It also takes more frequent paint jobs if you want to keep your beachfront home looking fresh. Paint cracks and chips more easily on beachfront homes. Thus, instead of repainting your home every 10-15 years, you may have to repaint your home every 5-8 years. Consider elastomeric paint for waterproofing.
Beachfront homes are also more susceptible to flooding. As a result, you should buy flood insurance. If there's ever a tsunami, god forbid, then your beachfront home will either be destroyed or need tremendous rehabilitation.
There will always be sand everywhere in your home. Hence, the importance of having a good outside shower or hose to wash off beforehand.
If you have money, fixing these problems is no big deal. Just make sure to budget higher ongoing maintenance costs before you purchase. Further, make sure there is protection already in place. The wider the beach and the farther away your property is from the beach, while still being beachfront, the better.
Buy A Beachfront Home For Lifestyle First
Now that you know all the problems with owning a beachfront property, you should really only buy one for lifestyle reasons. Don't expect your beachfront property to be a great investment, unless it's priced closer to the median home price. In fact, with climate change as a hot topic, a beachfront home might actually turn out to be a poor investment.
Instead of buying a beachfront home, I suggest you rent one instead. Use my BURL method to real estate investing by Buying Utility and Renting Luxury. Renting a beachfront home and investing in cash-flowing rental properties is the ideal example of where BURL investing is most applicable.
But if you just have to own a beachfront home, then at least keep the purchase to under 20% of your overall net worth. You don't want the stress of owning a beachfront property to keep you from enjoying it. If your beachfront home is not your primary home, then you should probably limit the purchase to 10% of your overall net worth or less.
Notice in the picture below how the beaches are all gone. Maybe during morning low tide, homeowners can find a sandy spot to lay on. At least hoping into a canoe from your backyard looks really fun.
Oceanview Home Over Beachfront Home
The beachfront home in my video above actually sold for only $6.4 million in October 2021 after being listed for $10 million for over a year. When I found out the price while laying on the beach in front of it, I was at first sad.
The selling price was a steal. My dream of owning my favorite home on my favorite beach was dashed. It would have been the perfect home to buy in 2027, when our son will enter the 4th grade. I imagined him jumping in the pool with his friends while my wife and I kept careful watch with a nice drink sitting in the gazebo. Then the kids would go run around in the sand and do some snorkeling to say hello to the fishies. It would have been a nice life.
However, after doing research about the problems of owning beachfront homes, I no longer feel too bad. $6.4 million is still a lot of money to sink into a home that is losing land and requires a lot of maintenance. The cost would be too much for our net worth at the moment.
It's strange, but once you buy luxury property on Oahu, it seems very hard to make a profit. I have been diligently searching and observing $3+ million homes on Oahu since 2014. They have only slightly moved up in price (~10%), despite the median home price in Oahu and the nation moving up strongly since (50%+). The pandemic has certainly helped push luxury home prices higher. But not as much as I had thought.
For now, I'll just have to take a six-minute drive down to my favorite beach and enjoy it for free. An ocean view home is a better investment. Perhaps if I bring my family along for our next business offsite, we'll rent a beachfront house to see what it's like. I have a feeling that being able to freely enjoy the beach takes us 70% of the way there.
Update Your Homeowner's Insurance Policy
Whether you have a beachfront, oceanview, or no-view home, you should update your homeowner's insurance policy. Building costs have risen and so have most property prices over just one year. As a result, your home may be underinsured.
Check out Policygenius for competitive homeowner's insurance policy quotes for free. To get the best homeowner's insurance rate, it is advised to shop around at least every two years as well.
If you want to practice my BURL real estate investing strategy, you can invest passively in single-family rental properties through a Fundrise fund. Fundrise is my favorite way to earn passive income in real estate. The funds invest in single-family and multi-family homes in the Sunbelt, where valuations are lower and rents are stronger.
Readers, do any of you own beachfront or waterfront homes? What are some other problems with owning such homes? What are some benefits? It’s concerning that soon after this post published, a volcanic explosion near Tonga caused flooding and tsunami warnings from Hawaii to Japan.
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Sam started Financial Samurai in 2009 to help make sense of financial chaos. With an MBA from Berkeley and 13 years of experience at Goldman Sachs and Credit Suisse, he helps readers achieve financial freedom sooner.
Sam is excited about investing in private growth companies in the artificial intelligence space with Fundrise, an affiliate partner. In 20 years, he doesn't want his kids asking why he didn't invest in AI near the beginning!
59 thoughts on “The Problem With Owning Beachfront Property: The Ocean”
KL
When I moved to Hawaii I was debating about Ocean front vs Ocean view. Ultimately, I could not deal with zero privacy ‘public’ beaches and non stop maintenance and bought Ocean view on the ridge. It was the best decision I ever made. The ocean front properties here never went up that much over the years because the houses all deteriorated. If you look on Kahala Ave, there are so many empty giant lots because the houses were tear down. Or it’s taking years to get permits to rebuild. Ocean front permits are the worst. I bought in a gated community with the most spectacular ocean views. It takes my breath away daily and is safe and peaceful. the HOA is super low considering it’s a manned gated community. People have no idea it’s the best neighborhood in Oahu so I think comparatively it’s been underpriced. Hawaii Loa ridge in Diamond head area.
Love the article! I live in Michigan, and this is my favorite time of year to be thinking about Hawaiian beaches! I purchased a lakefront property in Lake Michigan about 12 years ago. I won’t begin to compare Lake Michigan to the ocean (although it is beautiful), but I can relate to many of the points raised. My house is about 150 feet away from the water, yet I had a recurring nightmare for the first few years in which the water was lapping against the front of the house. Then, from 2013 to 2020, the lake level rose 6 feet! Many homes sustained significant damage or were lost due to erosion. “Sea” wall contractors couldn’t keep up. However, lake levels tend to rise and fall in cyclical patterns over time, being less impacted (than oceans) by other global factors, so what goes up usually comes down. Fortunately, at the high-water mark I only “lost” about 50 feet of beach, and the lake is already down about 2 feet since 2020 with almost half of the beach reappearing.
That aside, the biggest hurdle for me to overcome was financial drain, eventually leading to the hassle of dealing with renters. The ongoing property taxes and maintenance costs, which are favorable vs. oceanfront (no salt water, for example), are still much higher than a traditional home in exchange for a couple weeks per year of enjoyment. Even with lakefront, I highly recommend renting over buying. I found myself jealous of renters who would tell me they had such a wonderful week with their family, while knowing they experienced the benefit without the cost, stress and hassle of property ownership and management.
Why did I buy, then? Because it was a property that was once owned by my grandparents, and my siblings and I had very special memories of visiting them for a week each summer! And like you’ve said, what good is having money if you don’t use it to live life and make memories! All things considered, I feel it was the right decision for my family, but for prospective buyers, understand what you are signing up for!
The wife and I purchased a beach front vacation rental on the west coast of FL in May 2022. Enjoyed some brief rental income until Hurricane Ian flooded the unit.
Now we have a project on our hands (managing a total rebuild of the interior, coordinating with the HOA for exterior repairs, navigating city permits, etc).
Have to be prepared for anything with a beach condo. Whatever you do, purchase flood insurance. So thankful that we had this policy.
Wife and I 100% agree we do not want to be right on the ocean or have ocean front property We have been looking to purchase a property in the Diamond Head and Black Point area for the last year. Some of these properties have ocean views and are within smelling and hearing distance of the ocean but elevated sufficiently on solid rock. So unless there is a 50 foot tsunami, the homes should be fine. They also don’t get constantly bombarded by salt spray. To me these are the perfect homes if you want to be near the ocean and will likely appreciate significantly over time. The fact these near oceanfront properties haven’t appreciated like run of the mill homes nearby is exactly why we feel they are a bargain now. We will keep looking until we find something that works for us. Hope you find your dream home as well.
From 1990 – 2010, I lived directly on the east coast of FL or w/i walking distance, in several difference cities, with great beaches. I found, time after time, that after the first month or two, I went to the beach less and less often. On the other hand, living in a place with a direct oceanview is wonderful. Like one of the other posters said above, I think Ill again just rent a nice oceanfront FL condo.
If you are even thinking about buying a Hawaii oceanfront condo, home, townhome, anything: first rent for several months during winter.
I’ve stayed oceanfront for months on Lahaina, Waimea, Kona, Waikaloa, and other locales. After doing this for years, I would never, ever, ever own oceanfront anything.
Stay long enough, a few days of strong oceanfront swells will scare you right the hell away from oceanfront ownership. Those big waves keep pounding, pounding, pounding, 24/7. They regularly breach/crest condo and home seawalls. Then you’ll have pooling seawater on the condo grounds, or the parking structure. Multiple times I’ve seen these areas get totally flooded, people having to move cars out of ankle-deep saltwater because the drains can’t keep up. Then you think to yourself, how long is the foundation here going to last? The concrete, the blacktop on the parking spots. What about the pool fence? You can see the relentless ocean scouring away the big lava rocks and walls; will my development be allowed to replenish in the future, or will the Hawaiian government instead prefer my development fail? And how the heck much is wall replenishment going to cost?
The winter tradewinds also really pound homes and infrastructure, as well as driving those waves inland (depending on your location).
Then, take a good look at the structures, in particular anything metal. Start with metal balconies and stairs. Absolutely guaranteed you will see rusted, failing metal, even in newer developments. Stuff built in the 70s, 80s, 90s, forget it, it needs entirely new outdoor metalwork and refastening to concrete. Rusted lights. Really bad condition elevators. Pool pumping equipment looking like it’s going to fail at any moment.
Interior, everything metal fails. Right down to the metal contacts on light switches and outlets (seen it many times, right down to the scotch tape on switches to keep them in position). Reduced life on everything, including refrigerators, washing machines, A/C, bathroom fans, window locks and rollers, hinges, everything.
So, before you buy, go and observe for months at a time. Know exactly what you are getting yourself into, and what it’s going to cost to maintain (answer: a lot).
All problems Jack mentioned above are so true.
Cost of building seawall will be in millions of dollars. I have a neighbor built a stream rock wall in Manoa valley, cost over 800k.
I live on Oahu, regularly goes to a friend vacation home next to Obama’s vacation home property in Waimanalo, enjoyed the Obama’s seawall beach…perfect for young children.
so you can buy water front, look at the European coastline, it is often raised at least 50-80 ft above sea level. No issues with beach erosion, look at the Basque country, Santander, beautiful towns with amazing cuisine . you may also consider the East coast along the ICW, the intercoastal water ways with breath taking views of the marsh lands and its wild life, properties may rest 20ft above sea level. Check out Wilmington NC, you’ll have to get used to Hurricanes.
Happy New Year Sam! Great post on issues my spouse and I regularly discuss relating to our coastal
properties.
We own our primary as well as five units of rentals in north county San Diego. We intentionally bought just east of 101 for the reasons you stated so well in your post. As a result, our biggest concern in SD is not erosion or rising sea levels for those properties but rather drought and wildfire, and have thought about taking the tremendous gains we have had and getting out. But the rental market and interest in working remotely from SD is so strong that for now we are keeping the properties as we agree with your assessment of the real estate market generally. We also just purchased a vrbo property in a year round east coast beach town that is within 2-4 hours of DC, Philadelphia, and NY. We purposely bought several blocks from oceanfront there too, and the rental market is incredibly strong especially from remote workers. The town is sheltered from storms and hasn’t experienced a strong hurricane in 60 years so we will see. For the record I would never buy on the Florida coast especially Miami and the keys, or certain DE, VA, or Carolina beach towns. The climate change risk IMHO is too high.
Has anyone looked at Kona Development Partners?
Apparently they are coming up with a 325 acres (oceanfront) in Big Island and are planning to develop and sell them as 1 acre lots.
Is this a good investment?
IMO, it’s better to rent a beachfront house when you want to go. There is too much maintenance with the salty breeze. You’re right about erosion too.
Funny story. My cousin has a big beachfront property in Thailand. His grandparents claimed the land when nobody lived there. Then they filled in to claim more land from the ocean. Pretty lucky and opportunistic.
When you really look at it owning a beachfront home can be a pretty good win but the flexibility and dealing with the renters trashing it makes it much harder. Much higher insurance, and the threat of storms. But given the chance to purchase an oceanfront home in some areas while others pay for it is a pretty good idea if you buy in the right market at the right time.
It’s not just beachfront property climate change is affecting, the grassy plains in Colorado just went up in smoke destroying almost 1,000 homes. Insurance companies are threatening to pull out of high risk areas (e.g. California) if states don’t allow them to assess risk based on the future instead of the past.
Good reminder for everybody to update their homeowner’s insurance policy. Homeowners may be uninsured, especially since the median property price went up about 18% in 2021 alone.
Folks can shop around for free quotes with Policygenius.
I live in Colorado on a grassy mountainside, and the fires north of me in Boulder County have opened my eyes to the destruction that grass fires can cause. We have had many fires on our mountainside over the years, but fortunately the wind never was crazy.
Regarding insurance, our premiums in Colorado have been rising dramatically over the years due to fires, flooding, and hail damage. I won’t be surprised if they continue to do so and if some companies pull out. We have lost major insurers here in the past before.
Just imagine the resale value of your home when it becomes uninsurable, i don’t think a bank would be willing to lend to someone who can’t insure their property against a total loss.
I own a breachhouse in the Carolinas and yah it depends. Most beach homes on the east coast have public beaches behind them, which usually means a little more safety from rising oceans, but not much.
CAMA sets certain limits on how much beach must be behind you for the house to be “rebuildable”, aka insurable. The laws may be different now, but when I was shopping in 2018 the rule was 60 foot of dunes, from the top of the beach to your back door essentially. If you have little to no dunes, and your backdoor is at the top of those dunes right before they drop off into the beach, then essentially if your house gets wiped out, you can’t rebuild in the same spot, you can rebuild closer to the road, but you are not allowed to rebuild within 60′ of the top of the dunes. So if you can’t rebuild you have a lot with beach access. Some people use them for party gazebos.
So if you see a house you can afford, but it would not be re-buildable, then you can’t insure it, and if you can’t insure it, you can’t get a conventional loan. So essentially home shopping for me involved alot of time spent on google maps using the ruler function to get the CAMA distances.
Ultimately I bought a house on “2nd row”. This is not the beach front house, but the one across the street. Because my house is a 2 story house on stilts, I can see over my beach front neighbors. So I got the views and the sounds of the beach.
I would agree with all the other things said above. I think hurricanes are my biggest problem, followed by rust. My house has gained 70% equity in 4 years, but I did drop 100K into it when a hurricane hit about 3 weeks after moving in.
If I had to guess, I have 30 years before I won’t be able to offload it, because of rising tides. I will be out by then. Summer renters can cover 12 months of mortage/expenses in about 12 weeks of weekly rentals. If I rented beyond those summer months it would be profit, at a much cheaper rate.
Yeah, many times, watched kettles never boil, it’s the things that most folks least anticipate to happen that cause the most damage to their investments. Rising sea-levels, hurricanes, and tropical storms are one risk, but there’s also the first derivates from this devastation such as rising crime rates and poverty. Even if your home is well insured, many of your neighbors may not be and the beach community will still collapse.
Went to UCSB. Del Playa in IV is packed with beach front homes that have a cliff eroding below them. Some of them have been left hanging over the edge with no land below them. Its been a mess.
If you’ve watched the Netflix series Bloodline you know this is what happens to the family estate. These areas aren’t stable. Miami won’t be under water too soon, but it’s fresh water system that runs under the ground will soon be inundated with salt water and fresh water will have to be brought in. After seeing a sink hole open up under that condo building in Florida, I think everyone should be cautious. It’s the dream of many, but I’ve started to think that if you live in these areas, you have to be so wealthy you can afford a single family home you’re fine with losing a after a few years or selling for almost nothing as financing and insurance won’t be available. Treat it as disposable. Global warming is no joke. Entire island countries in the pacific have been moving to Australia and New Zealand because they’ve become uninhabitable.
That Florida condo building collapsing was alarming. I’d be surprised if that didn’t negatively affect the prices of other ocean front condos in that area and around the country.
In my condo building, we certainly discussed supporting our building’s structure. Reminds me to check where we are on that topic. We did earthquake retrofit it several years ago. So that’s good.
Great post, Sam. I own island properties in the PNW and strongly considered a couple of waterfront purchases in the 2012-2016 timeframe. For the reasons you outline above, I don’t have any major regret in passing them over. My properties are well enough above sea level, tsunami safe, etc. And my money has gone way further for space and privacy; my primary is on 2.5 acres. Insurance and property taxes are also a relative bargain from my waterfront neighbors down the block.
I do plan to enjoy waterfront living as a renter one day, maybe even next year:) BURL all the way!
I live on Maui in a community on the ocean. The shore is eroding and there is detailed data on the amount of erosion up the coast for the past 30 years. The county doesn’t allow seawalls or other protective devices as they deem the erosion natural, impossible to fight, and usually cause problems down the coast. I agree with the county but the county does protect large condo developments if they are getting millions in property taxes a year. Anyways, in my HOA the community will most likely be responsible for saving the townhomes that are about to fall into the ocean. Can you imagine footing the bill for your neighbor’s townhome that needs to be physically moved back 50 to 100 feet? We are talking 5% of the townhomes in the HOA are at serious risk. People bought these homes less than 10 years ago, knowing there were issues but the HOA is going to pay. Townhomes on the coastline are selling for >$3 million while one block off the coast they sell for <$1 million. Know what your HOA is responsible for or what they will vote on before you buy into a community.
“in my HOA the community will most likely be responsible for saving the townhomes that are about to fall into the ocean. Can you imagine footing the bill for your neighbor’s townhome that needs to be physically moved back 50 to 100 feet? We are talking 5% of the townhomes in the HOA are at serious risk.”
That seems nuts! Does that mean HOA dues are extremely high? How much does it cost to move a townhome 50-100 feet back?
Surely buyers have these calculations baked in before buying no?
Great article! There may be more affordable options on the Big Island, particularly the Kona side. If Oahu is preferred, I thought the ocean views from Puuikena Dr. are among the best.
Sea level rise will make erosion faster into the future…. I’m also scared of tsunamis, especially on the Pacific Ocean… We just spent a week by the ocean here. On the last day I had to take water to pour on our car windows before we could drive as it was so covered in salt spray you couldn’t see out. The car was parked right next to the beach and we were staying on the other side of the road from it. This is in mid-summer here. Being on a hill overlooking the ocean sounds much nicer.
PS – I think the volcanic islands in Hawaii are gradually sinking as the volcanism ends. The far NW of the chain shows the future for those nearer the Big Island which is still active. Coral atolls form on sinking/eroded volcanoes…
Great article ! It’s probably something a lot of people dream about, including me, to own a beach property someday. But you are right to point out this come with a lot of downsides.
Beaches are also a very good shock absorber for these massive Pacific ocean waves. When they are gone, the erosion of the land is even faster because the water hit the rock directly, without being smothed out on the sand.
Have you looked into buying a house on the Big Island ? I know this is not the same as Oahu, but home down there are so cheap. You can probably buy a very large beach front lot (many acres) and not have to worry about land erosion at all.
My favorite place to live in Hawaii would be Napali coast, on Kauai. But I think those homes are even more unaffordable, and even more at risk from erosion.
I think it’s interesting that you would recommend limiting the purchase price to 20% of your net worth. That would exclude just about everybody. Only the very wealthy can afford to purchase a home for no more than 20% of their net worth, even for non-luxury, middle class houses. For instance if the median house is about $200K in the US, that would mean the median individual would need $1M in net worth to purchase, and the median net worth is nowhere near that amount.
It’s true. 20% is the IDEAL percentage for primary residence = net worth. I look to challenge myself to shoot for ideal levels, especially if it’s regarding a luxury house that will cost a lot to maintain that I don’t need.
The following house buying or house ownership guideline is pertinent for the majority of people. If you are somehow able to strike it rich early on and buy your first or second primary residence for less than 30% of your net worth, more power to you.
Age 25 – 30: 80% – 200% of net worth – Shoot to buy a primary residence by age 30
Age 31 – 35: 60% – 150% – Work to grow your net worth through aggressive savings and investing
Age 36 – 40: 40% – 100% – Shoot to have your primary residence equal to a minority of your net worth by age 40
Age 41 – 45: 20% – 50% – Shoot to have your primary residence equal 30% of your net worth by age 45
46+: 20% of net worth or less if desired
Again, the typical American homeowner has 70%+ of their net worth tied up in their primary residence. They are house rich, cash poor. Ideally, I’d like for all of us to be house rich and cash rich.
Almost pulled the trigger on beachfront land in Florida Keys. Almost a full acre with beachfront and a 150 ft deep water canal in the back . Awesome property until….
1) Could take 7 years to get permit to build. County does not want new construction.
2) Keys are most likely going to be under water in 80-100 years. Not a good investment for the heirs.
The county/state is trying to justify spending $1.8 Billion to just raise the roads over the next 25 years. It won’t help. The keys are like a sponge and sits on coral. The water is already coming up through the ground in a couple of the Keys.
I find it odd that the waters of the Gulf if Mexico aren’t rising. The city pier on Dauphin Island is now totally landlocked. The ‘high tide’ marker is in the same place it was when a family friend built his beach house on Ft. Morgan in 1984.
You’ve come to the same conclusion I arrived at, Sam. While you might buy a mountain cabin, rent when you want the beach. And I spent a lot of my childhood living on Oahu.
And with the whole sea level rising thing, I definitely don’t want to own on the coast. Also, I’ve helped with hurricane cleanup at a number of beach communities. It’s not good. It’s never good.
It’s made even worse by the fact that beach houses, when I was a kid, were cheaply constructed and furnished with stuff that could have come from the thrift store. Now people are building Taj Mahals with wallboard and wall-to-wall carpets and antiques just two feet above the high tide mark (and expecting everyone else to help them with insurance and beach replenishment) all while trying to prevent all public access to “their” beaches.
Personally, I feel that access to the water should only be restricted for major military and civilian ports, and that access to the sea, like access to the sky, is not something we should ever allow to be blocked. If anything, were I king for a day, I would have those beach hoggers become responsible for putting in public access and parking, depending on the size of their properties.
And yes, people building on a barrier island and expecting permanence is crazy. There is even a song about a foolish man who built his house on the sand (and it is not a new song).
Spent some time working for a coastal engineering firm in FL. There are issues with vertical sea walls (increasing surrounding erosion, limits natural renourishment, loss of habitat eg turtle nesting, and don’t actually protect that well against surges).
There are likely “preferred” alternatives to sea walls but all are costly. Periodic renourishment (trucking in or pumping nearshore sand) plus native vegetation or nearshore breakwaters like rock groins.
All this to say as a private homeowner, your options are limited, costly, and will likely become a recurring expense
My suspicion is not so much rising water levels as much as loss or displacement of sand and erosion. In our case, the sand has simply washed away over the years, and there has been no effort to replenish the stock. Also, massive efforts to “clean up” the stormwater runoff from inland deserts, combined with very little rainfall in recent years, has resulted in much less sand being deposited to the ocean via rivermouths, etc. Now that it’s a crisis and a couple homes are literally sliding off the edge, it’s starting to get some attention.
However, similar to what you describe, the coastal commission will NOT allow you to fortify your foundation with caissons to prevent damage. You’re simply out of luck. They consider it interfering with the natural coastline, which is a big no-no in their book. Adding insult to injury, no homeowners insurance covers this type of loss. You simply take a tax write off for the next several decades!
I would agree though, don’t buy the house right on the water. Buy the one that’s one row back and slightly elevated:)
Holy smokes I can’t imagine losing part of my backyard like that with it just dropping off into the sea. Water is so beautiful but man is it one of the biggest stresses for home ownership. Water can cause so much damage even when it’s just falling from the sky let alone when it’s crashing into your backyard.
I’ve heard beach front homes also have to deal with a lot of rust problems. With so much salt and moisture in the air it’s going to put anything on the exterior or outside on an accelerated life cycle.
I’d love to rent a beach front property on vacation, but am content not to own one. Ocean view is pretty darn sweet though. You can still enjoy the beauty of the ocean everyday with less maintenance.
These are all good points. What do yo think about a beachfront condo? For example on Maui, they are still under $1M, so comparable to renting or buying elsewhere, but I wonder if the higher maintenance translates to higher HOA dues, when something comes up in the future, if that is passed on to the condo owners
The older and wealthier I get, the more I like paying an HOA due for upkeep purposes. I was exploring the beachfront condos in Oahu and they are nice. But they also feel old and the beaches have sadly eroded away. I found only one patch of a small beach, but even then, the water would flush up all the way to the wall on occasion.
I’ve been strongly considering buying a LAKEfront home as my primary home in the next 3-5 years. I’d like to have the property a few hundred feet from the water. I’d imagine the obstacles you noted may not apply to lakefront (apart from buying flood insurance)..
We owned a lakefront property for years and years in the Midwest. The problem is the weather is getting warmer which means more algae in the lakes. Not good. There have been many times over the years- we couldn’t swim in the water at the end of summer. Very sad what global warming is doing everywhere!
There are plenty of lakes in MN, WI, and MI that don’t have algae blooms including the one we live on, Gull Lake near Brainerd MN. To me there is nowhere better in the summer and we owned a lakefront condo near Incline Village on Lake Tahoe for over a decade. Our lake freezes in early December and melts in mid-April but water temperature reaches 75 by mid-June and 80 by mid July. Average summertime high temps are 80, warmer than Tahoe or San Diego and the night time lows are in the low 60’s.
We also love our beachfront condo in Naples Florida where we spend the other 6.5 months but prices have gone crazy. Our 1,500 sq/ft condo is now worth $2.5M and a knockdown lot on the Gulf just 1.1 miles south of us sold for $26M recently.
I grew up in a coastal town in Connecticut. I came to the same conclusions simply looking to rent a place after I graduated from college. I’ll never by a beachfront house on the ocean. On a lake, maybe. Salt water is a devourer of homes.
Beachfront cliff side homes in California can now considered to be temporary homes. Seawalls, cliffside protection, and other shoreline stabilization are prohibited in at least one county (possibly all of California).
Great article. I lived in a home fairly close to Kailua Beach and even not being on the water the maintenance was very high. That being said, if I had the wealth to support it, I’d love to live beachfront in Kailua.
When I moved to Hawaii I was debating about Ocean front vs Ocean view. Ultimately, I could not deal with zero privacy ‘public’ beaches and non stop maintenance and bought Ocean view on the ridge. It was the best decision I ever made. The ocean front properties here never went up that much over the years because the houses all deteriorated. If you look on Kahala Ave, there are so many empty giant lots because the houses were tear down. Or it’s taking years to get permits to rebuild. Ocean front permits are the worst. I bought in a gated community with the most spectacular ocean views. It takes my breath away daily and is safe and peaceful. the HOA is super low considering it’s a manned gated community. People have no idea it’s the best neighborhood in Oahu so I think comparatively it’s been underpriced. Hawaii Loa ridge in Diamond head area.
Love the article! I live in Michigan, and this is my favorite time of year to be thinking about Hawaiian beaches! I purchased a lakefront property in Lake Michigan about 12 years ago. I won’t begin to compare Lake Michigan to the ocean (although it is beautiful), but I can relate to many of the points raised. My house is about 150 feet away from the water, yet I had a recurring nightmare for the first few years in which the water was lapping against the front of the house. Then, from 2013 to 2020, the lake level rose 6 feet! Many homes sustained significant damage or were lost due to erosion. “Sea” wall contractors couldn’t keep up. However, lake levels tend to rise and fall in cyclical patterns over time, being less impacted (than oceans) by other global factors, so what goes up usually comes down. Fortunately, at the high-water mark I only “lost” about 50 feet of beach, and the lake is already down about 2 feet since 2020 with almost half of the beach reappearing.
That aside, the biggest hurdle for me to overcome was financial drain, eventually leading to the hassle of dealing with renters. The ongoing property taxes and maintenance costs, which are favorable vs. oceanfront (no salt water, for example), are still much higher than a traditional home in exchange for a couple weeks per year of enjoyment. Even with lakefront, I highly recommend renting over buying. I found myself jealous of renters who would tell me they had such a wonderful week with their family, while knowing they experienced the benefit without the cost, stress and hassle of property ownership and management.
Why did I buy, then? Because it was a property that was once owned by my grandparents, and my siblings and I had very special memories of visiting them for a week each summer! And like you’ve said, what good is having money if you don’t use it to live life and make memories! All things considered, I feel it was the right decision for my family, but for prospective buyers, understand what you are signing up for!
The wife and I purchased a beach front vacation rental on the west coast of FL in May 2022. Enjoyed some brief rental income until Hurricane Ian flooded the unit.
Now we have a project on our hands (managing a total rebuild of the interior, coordinating with the HOA for exterior repairs, navigating city permits, etc).
Have to be prepared for anything with a beach condo. Whatever you do, purchase flood insurance. So thankful that we had this policy.
Very sorry to hear! Thank goodness for flood insurance. Best of luck with the rebuild.
Wife and I 100% agree we do not want to be right on the ocean or have ocean front property We have been looking to purchase a property in the Diamond Head and Black Point area for the last year. Some of these properties have ocean views and are within smelling and hearing distance of the ocean but elevated sufficiently on solid rock. So unless there is a 50 foot tsunami, the homes should be fine. They also don’t get constantly bombarded by salt spray. To me these are the perfect homes if you want to be near the ocean and will likely appreciate significantly over time. The fact these near oceanfront properties haven’t appreciated like run of the mill homes nearby is exactly why we feel they are a bargain now. We will keep looking until we find something that works for us. Hope you find your dream home as well.
From 1990 – 2010, I lived directly on the east coast of FL or w/i walking distance, in several difference cities, with great beaches. I found, time after time, that after the first month or two, I went to the beach less and less often. On the other hand, living in a place with a direct oceanview is wonderful. Like one of the other posters said above, I think Ill again just rent a nice oceanfront FL condo.
If you are even thinking about buying a Hawaii oceanfront condo, home, townhome, anything: first rent for several months during winter.
I’ve stayed oceanfront for months on Lahaina, Waimea, Kona, Waikaloa, and other locales. After doing this for years, I would never, ever, ever own oceanfront anything.
Stay long enough, a few days of strong oceanfront swells will scare you right the hell away from oceanfront ownership. Those big waves keep pounding, pounding, pounding, 24/7. They regularly breach/crest condo and home seawalls. Then you’ll have pooling seawater on the condo grounds, or the parking structure. Multiple times I’ve seen these areas get totally flooded, people having to move cars out of ankle-deep saltwater because the drains can’t keep up. Then you think to yourself, how long is the foundation here going to last? The concrete, the blacktop on the parking spots. What about the pool fence? You can see the relentless ocean scouring away the big lava rocks and walls; will my development be allowed to replenish in the future, or will the Hawaiian government instead prefer my development fail? And how the heck much is wall replenishment going to cost?
The winter tradewinds also really pound homes and infrastructure, as well as driving those waves inland (depending on your location).
Then, take a good look at the structures, in particular anything metal. Start with metal balconies and stairs. Absolutely guaranteed you will see rusted, failing metal, even in newer developments. Stuff built in the 70s, 80s, 90s, forget it, it needs entirely new outdoor metalwork and refastening to concrete. Rusted lights. Really bad condition elevators. Pool pumping equipment looking like it’s going to fail at any moment.
Interior, everything metal fails. Right down to the metal contacts on light switches and outlets (seen it many times, right down to the scotch tape on switches to keep them in position). Reduced life on everything, including refrigerators, washing machines, A/C, bathroom fans, window locks and rollers, hinges, everything.
So, before you buy, go and observe for months at a time. Know exactly what you are getting yourself into, and what it’s going to cost to maintain (answer: a lot).
Fantastic recommendation and insight. Thanks for sharing!
Try before you buy folks! Same if you plan to geoarbitrage to save money as well.
Sam;
All problems Jack mentioned above are so true.
Cost of building seawall will be in millions of dollars. I have a neighbor built a stream rock wall in Manoa valley, cost over 800k.
I live on Oahu, regularly goes to a friend vacation home next to Obama’s vacation home property in Waimanalo, enjoyed the Obama’s seawall beach…perfect for young children.
Wow that’s expensive.
Good to be Obama and good to be his neighbor or be able to use the beach in front of his house!
That is great information thank you very much I always dream of having a beachfront property now I can stop dreaming !
so you can buy water front, look at the European coastline, it is often raised at least 50-80 ft above sea level. No issues with beach erosion, look at the Basque country, Santander, beautiful towns with amazing cuisine . you may also consider the East coast along the ICW, the intercoastal water ways with breath taking views of the marsh lands and its wild life, properties may rest 20ft above sea level. Check out Wilmington NC, you’ll have to get used to Hurricanes.
We used to have natural sea walls down here in Florida, they were called Mangroves and Sand Dunes!
Happy New Year Sam! Great post on issues my spouse and I regularly discuss relating to our coastal
properties.
We own our primary as well as five units of rentals in north county San Diego. We intentionally bought just east of 101 for the reasons you stated so well in your post. As a result, our biggest concern in SD is not erosion or rising sea levels for those properties but rather drought and wildfire, and have thought about taking the tremendous gains we have had and getting out. But the rental market and interest in working remotely from SD is so strong that for now we are keeping the properties as we agree with your assessment of the real estate market generally. We also just purchased a vrbo property in a year round east coast beach town that is within 2-4 hours of DC, Philadelphia, and NY. We purposely bought several blocks from oceanfront there too, and the rental market is incredibly strong especially from remote workers. The town is sheltered from storms and hasn’t experienced a strong hurricane in 60 years so we will see. For the record I would never buy on the Florida coast especially Miami and the keys, or certain DE, VA, or Carolina beach towns. The climate change risk IMHO is too high.
What beach town did you end up buying in?!
Rehoboth Beach, DE. Low property taxes and great restaurants and activities year round.
It does seem like there are more climate change risks to be concerned about yeah?
With fire risk.. makes me think owning in big cities with great infrastructure will be come more attractive.
Has anyone looked at Kona Development Partners?
Apparently they are coming up with a 325 acres (oceanfront) in Big Island and are planning to develop and sell them as 1 acre lots.
Is this a good investment?
No idea. But do some research and let us know! thanks
IMO, it’s better to rent a beachfront house when you want to go. There is too much maintenance with the salty breeze. You’re right about erosion too.
Funny story. My cousin has a big beachfront property in Thailand. His grandparents claimed the land when nobody lived there. Then they filled in to claim more land from the ocean. Pretty lucky and opportunistic.
When you really look at it owning a beachfront home can be a pretty good win but the flexibility and dealing with the renters trashing it makes it much harder. Much higher insurance, and the threat of storms. But given the chance to purchase an oceanfront home in some areas while others pay for it is a pretty good idea if you buy in the right market at the right time.
It’s not just beachfront property climate change is affecting, the grassy plains in Colorado just went up in smoke destroying almost 1,000 homes. Insurance companies are threatening to pull out of high risk areas (e.g. California) if states don’t allow them to assess risk based on the future instead of the past.
Good reminder for everybody to update their homeowner’s insurance policy. Homeowners may be uninsured, especially since the median property price went up about 18% in 2021 alone.
Folks can shop around for free quotes with Policygenius.
I live in Colorado on a grassy mountainside, and the fires north of me in Boulder County have opened my eyes to the destruction that grass fires can cause. We have had many fires on our mountainside over the years, but fortunately the wind never was crazy.
Regarding insurance, our premiums in Colorado have been rising dramatically over the years due to fires, flooding, and hail damage. I won’t be surprised if they continue to do so and if some companies pull out. We have lost major insurers here in the past before.
Just imagine the resale value of your home when it becomes uninsurable, i don’t think a bank would be willing to lend to someone who can’t insure their property against a total loss.
I own a breachhouse in the Carolinas and yah it depends. Most beach homes on the east coast have public beaches behind them, which usually means a little more safety from rising oceans, but not much.
CAMA sets certain limits on how much beach must be behind you for the house to be “rebuildable”, aka insurable. The laws may be different now, but when I was shopping in 2018 the rule was 60 foot of dunes, from the top of the beach to your back door essentially. If you have little to no dunes, and your backdoor is at the top of those dunes right before they drop off into the beach, then essentially if your house gets wiped out, you can’t rebuild in the same spot, you can rebuild closer to the road, but you are not allowed to rebuild within 60′ of the top of the dunes. So if you can’t rebuild you have a lot with beach access. Some people use them for party gazebos.
So if you see a house you can afford, but it would not be re-buildable, then you can’t insure it, and if you can’t insure it, you can’t get a conventional loan. So essentially home shopping for me involved alot of time spent on google maps using the ruler function to get the CAMA distances.
Ultimately I bought a house on “2nd row”. This is not the beach front house, but the one across the street. Because my house is a 2 story house on stilts, I can see over my beach front neighbors. So I got the views and the sounds of the beach.
I would agree with all the other things said above. I think hurricanes are my biggest problem, followed by rust. My house has gained 70% equity in 4 years, but I did drop 100K into it when a hurricane hit about 3 weeks after moving in.
If I had to guess, I have 30 years before I won’t be able to offload it, because of rising tides. I will be out by then. Summer renters can cover 12 months of mortage/expenses in about 12 weeks of weekly rentals. If I rented beyond those summer months it would be profit, at a much cheaper rate.
Yeah, many times, watched kettles never boil, it’s the things that most folks least anticipate to happen that cause the most damage to their investments. Rising sea-levels, hurricanes, and tropical storms are one risk, but there’s also the first derivates from this devastation such as rising crime rates and poverty. Even if your home is well insured, many of your neighbors may not be and the beach community will still collapse.
Went to UCSB. Del Playa in IV is packed with beach front homes that have a cliff eroding below them. Some of them have been left hanging over the edge with no land below them. Its been a mess.
If you’ve watched the Netflix series Bloodline you know this is what happens to the family estate. These areas aren’t stable. Miami won’t be under water too soon, but it’s fresh water system that runs under the ground will soon be inundated with salt water and fresh water will have to be brought in. After seeing a sink hole open up under that condo building in Florida, I think everyone should be cautious. It’s the dream of many, but I’ve started to think that if you live in these areas, you have to be so wealthy you can afford a single family home you’re fine with losing a after a few years or selling for almost nothing as financing and insurance won’t be available. Treat it as disposable. Global warming is no joke. Entire island countries in the pacific have been moving to Australia and New Zealand because they’ve become uninhabitable.
Haven’t seen it, but will.
That Florida condo building collapsing was alarming. I’d be surprised if that didn’t negatively affect the prices of other ocean front condos in that area and around the country.
In my condo building, we certainly discussed supporting our building’s structure. Reminds me to check where we are on that topic. We did earthquake retrofit it several years ago. So that’s good.
Great post, Sam. I own island properties in the PNW and strongly considered a couple of waterfront purchases in the 2012-2016 timeframe. For the reasons you outline above, I don’t have any major regret in passing them over. My properties are well enough above sea level, tsunami safe, etc. And my money has gone way further for space and privacy; my primary is on 2.5 acres. Insurance and property taxes are also a relative bargain from my waterfront neighbors down the block.
I do plan to enjoy waterfront living as a renter one day, maybe even next year:) BURL all the way!
I live on Maui in a community on the ocean. The shore is eroding and there is detailed data on the amount of erosion up the coast for the past 30 years. The county doesn’t allow seawalls or other protective devices as they deem the erosion natural, impossible to fight, and usually cause problems down the coast. I agree with the county but the county does protect large condo developments if they are getting millions in property taxes a year. Anyways, in my HOA the community will most likely be responsible for saving the townhomes that are about to fall into the ocean. Can you imagine footing the bill for your neighbor’s townhome that needs to be physically moved back 50 to 100 feet? We are talking 5% of the townhomes in the HOA are at serious risk. People bought these homes less than 10 years ago, knowing there were issues but the HOA is going to pay. Townhomes on the coastline are selling for >$3 million while one block off the coast they sell for <$1 million. Know what your HOA is responsible for or what they will vote on before you buy into a community.
“in my HOA the community will most likely be responsible for saving the townhomes that are about to fall into the ocean. Can you imagine footing the bill for your neighbor’s townhome that needs to be physically moved back 50 to 100 feet? We are talking 5% of the townhomes in the HOA are at serious risk.”
That seems nuts! Does that mean HOA dues are extremely high? How much does it cost to move a townhome 50-100 feet back?
Surely buyers have these calculations baked in before buying no?
Great article! There may be more affordable options on the Big Island, particularly the Kona side. If Oahu is preferred, I thought the ocean views from Puuikena Dr. are among the best.
Yes, Hawaii Loa Ridge is nice. Feels nice to have security, the views, and tennis courts up there. I’ve played there several times.
A lot of the homes seem outdated though. All from the 1990s. Gotta find a new one!
Sea level rise will make erosion faster into the future…. I’m also scared of tsunamis, especially on the Pacific Ocean… We just spent a week by the ocean here. On the last day I had to take water to pour on our car windows before we could drive as it was so covered in salt spray you couldn’t see out. The car was parked right next to the beach and we were staying on the other side of the road from it. This is in mid-summer here. Being on a hill overlooking the ocean sounds much nicer.
PS – I think the volcanic islands in Hawaii are gradually sinking as the volcanism ends. The far NW of the chain shows the future for those nearer the Big Island which is still active. Coral atolls form on sinking/eroded volcanoes…
Great article ! It’s probably something a lot of people dream about, including me, to own a beach property someday. But you are right to point out this come with a lot of downsides.
Beaches are also a very good shock absorber for these massive Pacific ocean waves. When they are gone, the erosion of the land is even faster because the water hit the rock directly, without being smothed out on the sand.
Have you looked into buying a house on the Big Island ? I know this is not the same as Oahu, but home down there are so cheap. You can probably buy a very large beach front lot (many acres) and not have to worry about land erosion at all.
My favorite place to live in Hawaii would be Napali coast, on Kauai. But I think those homes are even more unaffordable, and even more at risk from erosion.
No. I’m focused on Oahu due to infrastructure, restaurants, education, family, and things to do. Plenty of space to feel secluded in Oahu.
I think it’s interesting that you would recommend limiting the purchase price to 20% of your net worth. That would exclude just about everybody. Only the very wealthy can afford to purchase a home for no more than 20% of their net worth, even for non-luxury, middle class houses. For instance if the median house is about $200K in the US, that would mean the median individual would need $1M in net worth to purchase, and the median net worth is nowhere near that amount.
It’s true. 20% is the IDEAL percentage for primary residence = net worth. I look to challenge myself to shoot for ideal levels, especially if it’s regarding a luxury house that will cost a lot to maintain that I don’t need.
The following house buying or house ownership guideline is pertinent for the majority of people. If you are somehow able to strike it rich early on and buy your first or second primary residence for less than 30% of your net worth, more power to you.
Age 25 – 30: 80% – 200% of net worth – Shoot to buy a primary residence by age 30
Age 31 – 35: 60% – 150% – Work to grow your net worth through aggressive savings and investing
Age 36 – 40: 40% – 100% – Shoot to have your primary residence equal to a minority of your net worth by age 40
Age 41 – 45: 20% – 50% – Shoot to have your primary residence equal 30% of your net worth by age 45
46+: 20% of net worth or less if desired
Again, the typical American homeowner has 70%+ of their net worth tied up in their primary residence. They are house rich, cash poor. Ideally, I’d like for all of us to be house rich and cash rich.
See Primary Residence As A Percentage Of Net Worth
Almost pulled the trigger on beachfront land in Florida Keys. Almost a full acre with beachfront and a 150 ft deep water canal in the back . Awesome property until….
1) Could take 7 years to get permit to build. County does not want new construction.
2) Keys are most likely going to be under water in 80-100 years. Not a good investment for the heirs.
The county/state is trying to justify spending $1.8 Billion to just raise the roads over the next 25 years. It won’t help. The keys are like a sponge and sits on coral. The water is already coming up through the ground in a couple of the Keys.
7 years is a lifetime. Better to buy a home built out already that has all the protection grandfathered in.
But yeah, our descendants might not have a home left to enjoy. Sad.
I find it odd that the waters of the Gulf if Mexico aren’t rising. The city pier on Dauphin Island is now totally landlocked. The ‘high tide’ marker is in the same place it was when a family friend built his beach house on Ft. Morgan in 1984.
You’ve come to the same conclusion I arrived at, Sam. While you might buy a mountain cabin, rent when you want the beach. And I spent a lot of my childhood living on Oahu.
There are also new studies that say, along with the salt spray, coastal dwellers are getting a constant rain of toxins. https://www.science.org/content/article/sea-spray-belching-toxic-chemicals-back-land
And with the whole sea level rising thing, I definitely don’t want to own on the coast. Also, I’ve helped with hurricane cleanup at a number of beach communities. It’s not good. It’s never good.
It’s made even worse by the fact that beach houses, when I was a kid, were cheaply constructed and furnished with stuff that could have come from the thrift store. Now people are building Taj Mahals with wallboard and wall-to-wall carpets and antiques just two feet above the high tide mark (and expecting everyone else to help them with insurance and beach replenishment) all while trying to prevent all public access to “their” beaches.
Personally, I feel that access to the water should only be restricted for major military and civilian ports, and that access to the sea, like access to the sky, is not something we should ever allow to be blocked. If anything, were I king for a day, I would have those beach hoggers become responsible for putting in public access and parking, depending on the size of their properties.
And yes, people building on a barrier island and expecting permanence is crazy. There is even a song about a foolish man who built his house on the sand (and it is not a new song).
Spent some time working for a coastal engineering firm in FL. There are issues with vertical sea walls (increasing surrounding erosion, limits natural renourishment, loss of habitat eg turtle nesting, and don’t actually protect that well against surges).
There are likely “preferred” alternatives to sea walls but all are costly. Periodic renourishment (trucking in or pumping nearshore sand) plus native vegetation or nearshore breakwaters like rock groins.
All this to say as a private homeowner, your options are limited, costly, and will likely become a recurring expense
We have a very similar situation occuring in San Clemente.
https://www.sandiegouniontribune.com/news/california/story/2021-10-02/coastal-erosion-san-clemente
My suspicion is not so much rising water levels as much as loss or displacement of sand and erosion. In our case, the sand has simply washed away over the years, and there has been no effort to replenish the stock. Also, massive efforts to “clean up” the stormwater runoff from inland deserts, combined with very little rainfall in recent years, has resulted in much less sand being deposited to the ocean via rivermouths, etc. Now that it’s a crisis and a couple homes are literally sliding off the edge, it’s starting to get some attention.
However, similar to what you describe, the coastal commission will NOT allow you to fortify your foundation with caissons to prevent damage. You’re simply out of luck. They consider it interfering with the natural coastline, which is a big no-no in their book. Adding insult to injury, no homeowners insurance covers this type of loss. You simply take a tax write off for the next several decades!
I would agree though, don’t buy the house right on the water. Buy the one that’s one row back and slightly elevated:)
Holy smokes I can’t imagine losing part of my backyard like that with it just dropping off into the sea. Water is so beautiful but man is it one of the biggest stresses for home ownership. Water can cause so much damage even when it’s just falling from the sky let alone when it’s crashing into your backyard.
I’ve heard beach front homes also have to deal with a lot of rust problems. With so much salt and moisture in the air it’s going to put anything on the exterior or outside on an accelerated life cycle.
I’d love to rent a beach front property on vacation, but am content not to own one. Ocean view is pretty darn sweet though. You can still enjoy the beauty of the ocean everyday with less maintenance.
These are all good points. What do yo think about a beachfront condo? For example on Maui, they are still under $1M, so comparable to renting or buying elsewhere, but I wonder if the higher maintenance translates to higher HOA dues, when something comes up in the future, if that is passed on to the condo owners
The older and wealthier I get, the more I like paying an HOA due for upkeep purposes. I was exploring the beachfront condos in Oahu and they are nice. But they also feel old and the beaches have sadly eroded away. I found only one patch of a small beach, but even then, the water would flush up all the way to the wall on occasion.
I’ve been strongly considering buying a LAKEfront home as my primary home in the next 3-5 years. I’d like to have the property a few hundred feet from the water. I’d imagine the obstacles you noted may not apply to lakefront (apart from buying flood insurance)..
Thoughts?
We owned a lakefront property for years and years in the Midwest. The problem is the weather is getting warmer which means more algae in the lakes. Not good. There have been many times over the years- we couldn’t swim in the water at the end of summer. Very sad what global warming is doing everywhere!
Ah, the algae bloom. That is sad! And there’s nothing you can do about it right?
Nope, nothing. In the Midwest, the pesticides that runoff from the farmlands are making lakes full of algae also.
There are plenty of lakes in MN, WI, and MI that don’t have algae blooms including the one we live on, Gull Lake near Brainerd MN. To me there is nowhere better in the summer and we owned a lakefront condo near Incline Village on Lake Tahoe for over a decade. Our lake freezes in early December and melts in mid-April but water temperature reaches 75 by mid-June and 80 by mid July. Average summertime high temps are 80, warmer than Tahoe or San Diego and the night time lows are in the low 60’s.
We also love our beachfront condo in Naples Florida where we spend the other 6.5 months but prices have gone crazy. Our 1,500 sq/ft condo is now worth $2.5M and a knockdown lot on the Gulf just 1.1 miles south of us sold for $26M recently.
Yeap, definitely agree with Lakefront is the way to go. Ideally – a lake / river that also connects to the ocean – like at Discovery Bay, CA.
I grew up in a coastal town in Connecticut. I came to the same conclusions simply looking to rent a place after I graduated from college. I’ll never by a beachfront house on the ocean. On a lake, maybe. Salt water is a devourer of homes.
Your dream of having your kids’ friends over at the beach house sounds lovely and I hope it happens for your family one day. Go BURL!
Beachfront cliff side homes in California can now considered to be temporary homes. Seawalls, cliffside protection, and other shoreline stabilization are prohibited in at least one county (possibly all of California).
Did you factor this in as well? https://www.civilbeat.org/2018/01/heres-how-the-state-could-end-up-owning-your-oceanfront-property/
Great article. I lived in a home fairly close to Kailua Beach and even not being on the water the maintenance was very high. That being said, if I had the wealth to support it, I’d love to live beachfront in Kailua.