As sea-side cities such as Carlsbad become densely populated, welcoming throngs of new residents to the coast, living next to the water affords the owner unparalleled privacy and exclusivity.  What would one expect to pay for the right to call the Pacific Ocean your backyard?  Scarcity is a large part of the price equation. There are only a few streets in Carlsbad that have homes that face the ocean without any obstructions, such as a road, separating them from the water.  Even rarer are those properties that allow the owner to open the door and step their foot on the sand.  A decade ago, such a property would have cost its owner between $800,000 to $1,000,000 dollars, depending on the size and condition of the home.  Today, only two Carlsbad residences are being actively marketed that are on the sand.  They are priced from $7,000,000 to $9,000,000. 

The Price Premium

Curious what your home would sell for if your patio backed up to the shoreline?  In 1996, several properties were sold on Ocean St., one of the rare Carlsbad streets that feature ocean front real estate.  For example, a 4 bed, 3 bath, 2,500 Sq.ft property transferred for a $1,070,000. A similar property elsewhere in the city sold for around $320,000.  The price of ‘on-the-sand’ real estate carried over a 300% premium. In 2005, after several beach-front residences closed escrow, the cost has magnified to over 500%.  The price of your property would be 5 times more expensive on the water. 

Financing Your Dream

According to a representative from Countrywide home mortgage, in order to finance the $7,000,000 it would take to purchase one of the currently available beach-front properties, a person would have to put a minimum of $2,000,000 down.  With an interest-only loan on the remaining $5,000,000, the payment would be about $26,000 a month.  The property taxes would be an additional $87,000 dollars a year.  With insurance and maintenance excluded, you would pay almost $1,100 a day to wake up with your feet in the ocean.  

Ocean-front Options

Venture south of Carlsbad into Encinitas, Cardiff and Del Mar and you will find that property on the beach only increases in value.  If your dream is to live on the water, but $7,000,000 is out of reach, where might you buy?  On June 13, 2005, the Wall Street Journal named Oceanside the ‘Hottest Vacation-Home Market’ in the country, quoting a 161.6% increase in price in the last 5 years.  What they failed to mention is that Oceanside still has the most affordable beach-front real estate in San Diego.  Along Pacific St. in Oceanside, large single-family homes on the water are currently selling for around $3.5 million dollars.  On the opposite side of Pacific, expect to pay around $2.5 million.  Other options include the famed ‘Robert’s Cottages’ along The Strand near the Oceanside pier, which have recently sold for around $600,000.  Or you may consider an ocean-front condominium in the exceptional San Miguel complex that, if one were available, could be bought for around $1,000,000. 

Building Your Dream Home

With the premium on beach-front property increasing, some residents have bought vacant land or a ‘tear-down’ property, worth only as much as the land that it sits on, to build their dream home.  However, the cost of building a home on the water is not necessarily the largest obstacle to overcome.  In many cases, attaining the necessary building permits necessary can be the toughest challenge.