L A South Bay Real Estate

How Much Is An Ocean View Really Worth? – Part 1

Posted on 25. Nov, 2009 by admin in Market Forecasts

How much is an ocean view really worth? This is a great question from the trenches of questions that many have wrestled with. Based on many variables being evaluated at the same time this is pretty much impossible to figure out to any real precision. Here is a little study performed on recent sales of South Redondo properties. Since the number of properties sold is relatively small on a monthly basis I took quarterly sales to get a larger more reliable sample size.  I chose the third quarter of 2009 for South Redondo properties. The first chart shows Median Prices for Townhomes and Single Family homes, the lower chart compares average values.

The chart to left compares Median Home prices for view and no view properties, The chart is not an indicator of actual home values but is showing how much buyers are paying for these homes. It is an indicator of how much of a premium buyers are willing to pay. Half of the buyers are paying above the median value and the other half of the buyers are buying below the value. The median value for Ocean View properties was $1,112,500. The corresponding median value for non view properties was $684,500,, The Ocean view properties median value was 61.5 % higher than the non ocean view properties.

The chart to the left shows the Average prices for View and No view properties, The chart is not an indicator of actual home values but is showing how much buyers are paying for these homes on a average basis. It is an indicator of how much of a premium buyers, This was calculated by adding up all the home prices and dividing by the number of homes sold in the period. The average price of a home with an ocean view was $ 1,153,238, The value of the no ocean view properties was $798,500 . the ocean view property values were 44.4% higher

There are several factors that need to be considered when evaluating the worth of these views.  Here are some of these factors:

1- Can the value of the view change over time? Can buildings be built in the future interfering with the views, Are there trees blocking the view, can they be pruned. Are their height limitations for future building in the area, are their possibilities for negative zoning changes?

2- What is the direction or orientation of the target view, How far away is the view?

3- Can the view be improved, for example adding bigger windows or a roof deck?

4- Is the view from every room, the bedroom, living room etc. What is the relationship with sun exposure?

5-  How much does the age or size of the home effect value at the same time.

As in all home valuations subjective opinions carry a lot of weight, the quality of the view will of course vary from  Peek – A- Boo type view to a Panoramic or Coastline view. Beauty(view) is in the eyes of the beholder applies very much here.

In Part 2  I will take a deeper look into  this study and try to separate other variables.