As an owner of lakefront real estate, I’ve been curious as to how waterfront homes and lots have performed over the years as an investment. I speak from my own experience as well as the experience of my family when I say the results are amazing.
We purchased our personal lakefront property in 1998. We were in a multiple offer situation at the time, therefore we offered the Seller nearly full price at $348,500, and were the successful bidders. The kicker for us was the house was sitting on two lots with a little old house that physically only sat on one lot, while the garage and septic field lived on the other.
At that time, lakefront lots were running around $180,000-$200,000. There was and is no question in our minds that we got a great deal at the time. So for sake of argument, let's take out the “good deal” factor and look specifically at market value of lakefront, and let's value each lot at $200,000.
Now let's compare to the average non-lakefront lot price in Vernon in 1998. At that time, looking at MLS sales for 1998, the average lot price was $58,006.
If we fast forward ourselves to the year 2013, one of these same lakefront lots we purchased in 1998 was appraised for $700,000. In 15 years, this lot increased by 250% or $500,000. In comparison, the average non-lakefront lot price at year end 2013 was $169,335. An increase of 192%. Or $111,336.
It is obvious which investment was the better investment. Would you rather have an increase of 250% or 192%? Or more importantly, $111,336 or $500,000??
I have one more example that spans a much longer period of time, just to highlight the investment potential of owning lakefront property in Vernon.
In 1954, my parents purchased a waterfront lot on Okanagan lake for $2500. They built a house, wharf, retaining walls, plus landscaped it for a total of approximately $17,400. Today, the tax assessed value according to the City of Vernon is $1,060,000, with current market value arguably around $1,300,000. However let’s take the lower number for this example to be ultra conservative. Even using this number, this is an increase of 60 times the original value, and a dollar value increase of $1,042,600! Not bad, especially if it’s your principal residence and capital gains tax on the sale does not apply!
In comparison, the average house in downtown Vernon in 1954 sold for $11,400 (I know this as my parent’s put an offer on this value of house that year, missed buying it, and purchased the waterfront lot instead). The average house price according to the Okanagan Mainline Real Estate Board at year end 2013 was $326, 261, resulting in an increase of only 27.6 times, or $314,861.
Once again, the lakefront investment wins by a landslide – 27.6 times increase versus 60 times, and $314,861 versus $1,060,000.
As these examples show, over time, lakefront is always an excellent investment and certainly in my experience, the best investment you can make.