WalletHub names Key West the second-best beach town in which to live in the United States

Full Story at https://wallethub.com/edu/best-beach-towns-to-live-in/36567/

Living by the beach is the ultimate dream for many Americans. After all, beachside communities often have represented a relaxed and luxurious way of life. But few realize their dream of living by the water, precisely because of the misconception that beach towns are relatively more expensive and generally less livable than landlocked cities.

Contrary to popular belief, however, many beach towns are suitable to everyday life — and easy on the wallet. So in order to determine the beach communities that are ideal for making one’s permanent home, WalletHub compared 227 cities across 49 key indicators of livability. Our data set ranges from housing costs to share of for-sale waterfront homes to quality of beach water.

Main Findings

Best Beach Towns to Live in

Ask the Experts

Beach-town life is not for everyone. To help prospective residents make the best decision, we asked a panel of experts to share their thoughts on the following key questions:

1. What should people look for in choosing a beach property?
2. Is it better to live in a beach town with a large year-round population compared to those with a more seasonal population?
3. What affects the value of beach properties over time? How can someone determine if a given property is a good investment for the long term?
4. How might beachfront real estate be affected by rising ocean levels due to climate change? Are some areas more vulnerable than others? What can homeowners and/or local authorities do to mitigate potential problems due to climate change?

Back to All Experts

Austin Troy

Professor and Chair of the Department of Planning and Design at the University of Colorado Denver

What should people look for in choosing a beach property?

The desirability of a particular beachfront property is largely in the eye of the beholder. People live near the beach for beautiful views and access to the water, and often these judgments are very subjective. So those who want to live along the beach should first of all follow their gut.

That being said, potential buyers should also closely consider the risks. Beachfront living comes with a lot of environmental hazards. These homes are potentially subject to flooding, storm surges, high winds, hurricanes, coastal erosion, and even pollution, depending on their geography. Interestingly, research finds that beach dunes play an important role in regulating some of these hazards. Large dune widths particularly help buffer adjacent housing from storm surges and flooding. Keeping dunes at least partially vegetated can help make those dunes even more effective in these roles.

Potential buyers should closely consult flood and other hazard zone disclosure reports. Most transactions (those that involve financing by a federally regulated financial entity) will require a flood zone determination, and that should be closely reviewed. Buyers can also hire experts to review the geology, erodibility, and even potential hurricane exposure of the site. Given how expensive most beach homes are, such an expense prior to closing is well worth the money.

Is it better to live in a beach town that has a large year round population compared to those with a more seasonal population?

This is a difficult question to answer, and really depends on the preferences of the buyer. If he or she is looking for a vacation or retirement home and desires privacy, one would imagine that they would opt for a town with seasonal population. If that person intends to work and wishes to have access to a viable employment market, or if they just like to have more company and activity, then a year round population makes more sense. How this factor affects the premium paid on beachfront property is hard to say, although I imagine premiums will exist in both cases.

What affects the value of beach properties over time? How can someone determine if a given property is a good investment for the long term?

Beachfront property is highly desirable and can offer stunning views and great recreational opportunities. According to the literature, the premium for beachfront property is typically large, but varies significantly by market. About 10 years ago I worked on a project for the New Jersey Department of Environmental Protection, helping them value their natural capital, and we explored the impacts of beaches on property values in several different markets. Our econometric models of seven housing markets showed that for four of those markets, price premiums were very large -- an increase of between $81,000 and $194,000 on average for being within 300 feet of a beach, relative to similar non-beach properties. For one market segment, prices were found to be slightly lower along the beach, although that may have been due to measurement error. And for two of the seven markets, the positive price premium extended as far as 2000 feet away from the beach, with values ranging from $16,000 to $44,000.

Several factors have been found to influence the magnitude of the premium. One is beach width. One study in South Carolina found that each one-foot increase in beach width was associated with over $500 in property value increase for direct beachfront property, while that premium was about half the amount for properties located ½ mile from the beach.

Another is water quality. While the impact of ocean water quality on property values still needs more study, a number of studies have looked at water clarity in lakes and found a significant impact. For instance, in a series of New Hampshire lakes, a study found that a one meter decrease in water clarity could reduce adjacent housing prices by between 0.9% and 6% of sales price, depending on the market segment.

And finally there is the question of environmental hazard. The more objectively quantifiable is that hazard for a particular property, the more of a negative impact it will have on property values. If this hazard is already known prior to transaction, the ultimate sales price should theoretically reflect this hazard. But if a hazard doesn’t become apparent until after you purchase a home (say, that a beach zone is eroding far faster than anyone previously thought), that means you are likely to take a haircut on the property. Likewise, if a major disaster happens that affects beachfront properties in the vicinity, this will also have a significant downward effect on prices. These risks go with the territory when it comes to waterfront ownership.

How might beach-front real estate be affected by rising ocean levels due to climate change? Are some areas more vulnerable than others? What can homeowners and/or local authorities do to mitigate potential problems due to climate change?

Following up on my last point to the question above, climate change increases the chance that potential hazards like flooding, storm surge, wind, hurricane, etc., will catastrophically affect a beachfront property. People talk a lot about the rise in sea level (which has already risen 8” since 1880) with respect to global climate change. However, that rise is not just projected to manifest like the slow filling of a bathtub (although averaged over the long-term, it is kind of like that). Instead, it will be characterized by many and more extreme coastal storm surges, in which we see sudden and violent rises in water level, exposing coastal properties to catastrophic flooding. Eventually, even in the absence of storm surges, the lowest lying properties will be too expensive to protect and so will be lost to sea level rise.

Some of the lowest lying communities in the U.S. are already feeling this effect. A 2016 New York Times piece conducted a detailed analysis of the potential impacts of sea level rise on coastal real estate, and found that they are appreciating less rapidly than other markets. They report huge potential increases in the hazards that coastal landowners will face; for instance, Southeast Florida’s current 10 tidal floods per year are predicted to increase to 240 per year by 2045. Facts like this are why chief economist of Freddie Mac, Sean Becketti, has issued dire predictions suggesting storm surges will lead to the collapse, and even abandonment of coastal real estate markets.

For many coastal properties, these hazards may not become material for another 3-5 decades, depending on the location. But owners in such situations should be aware that expectations of this future condition may creep into the price-setting behaviors in coastal property markets before then, leaving them with far less valuable properties. It’s hard to say when we’ll start seeing significant across-the-board drops in coastal real estate values, but all coastal owners should closely monitor market indicators and those who are most risk averse may want to consider moving sooner rather than later.

• Timothy L. Hamilton Assistant Professor of Economics at University of Richmond
• Stacey Swearingen White Chair and Professor of Urban Planning at University of Kansas
• Sharon Moran Associate Professor of Environmental Studies and Leader of the Environmental and Natural Resources Policy (ENRP) Doctoral Program at SUNY
• Sabrina McCormick Associate Professor in the Department of Environmental and Occupational Health at George Washington University
• Philip E. Graves Professor of Economics at the University of Colorado Boulder
• Maxine Burkett Global Fellow in the Environmental Change and Security Program at Woodrow Wilson International Center for Scholars & Professor of Law at the University of Hawai'i at Manoa
• Laura A. Bakkensen Assistant Professor in the School of Government and Public Policy at University of Arizona
• John (Jack) Williams Professor of Geography and Director of the Center for Climatic Research at University of Wisconsin - Madison
• Jessica Hellmann Director of the Institute on the Environment at the University of Minnesota on the Environment at the University of Minnesota
• Jason Scorse Director of the Center for the Blue Economy and Associate Professor & Chair of the International Environmental Policy Program at the Middlebury Institute of International Studies at Monterey
• Gary Bauer Professor of Law in the Cooley Law School at Western Michigan University
• Dave Marcouiller Professor and State Extension Specialist in the Department of Urban and Regional Planning at University of Wisconsin
• A. Dan Tarlock Professor of Law in the Chicago-Kent College of Law at Illinois Institute of Technology
• Austin Troy Professor and Chair of the Department of Planning and Design at the University of Colorado Denver

Back to All Experts

Timothy L. Hamilton

Assistant Professor of Economics at University of Richmond

What should people look for in choosing a beach property?

Property markets tend to be well informed and do a good job of pricing that information. If you want great properties with great amenities, you’re likely going to pay for it. Decide what you like and what you’re willing to pay.

A major uncertainty in what are often quickly growing beach communities is future development. It’s important to pay attention to zoning laws and commercial trends to help predict what type of development might take place in town or on neighboring lots. Local property taxes can also be important. High property taxes could deter commercial development and signal the community’s commitment to investment.

Is it better to live in a beach town that has a large year round population compared to those with a more seasonal population?

This all depends on what type of lifestyle you’re looking for. If the town lacks a considerable year-round population, full-time job opportunities will be hard to come by. Housing markets tend to be a bit thin in these towns as well, so resale will be a little more difficult. Towns with a year-round population tend to have better infrastructure and non-beach related services/amenities.

What affects the value of beach properties over time? How can someone determine if a given property is a good investment for the long term?

Determining whether any property is a good investment is always a bit tricky but any financial profession should be able to walk you through a few calculations. The only real difficulty is determining how much the property will appreciate/depreciate in the future. This depends on residential/commercial development in the town, economic growth in the surrounding area, and any changes that could impact natural amenities (i.e., climate change). In general, there’s a limited amount of coastline so one would expect a coastal price premium well into the future.

How might beach-front real estate be affected by rising ocean levels due to climate change? Are some areas more vulnerable than others? What can homeowners and/or local authorities do to mitigate potential problems due to climate change?

Climate change poses a very serious threat to beach-front real estate. Rising sea levels are well-understood and will likely cut off some quality property. The potential for an increase in storm surges is less well-understood but is a real danger. Rising premiums in flood insurance markets are a good indicator of expected future risks. The best mitigation strategy from a homeowner’s perspective is to look at any changes over the last 20 years and understand that those will likely continue into the near future (and perhaps into the distant future). Of course, rising sea levels do not mean that beach-front property is disappearing, it’s just moving.

Methodology

In order to determine the best beach towns in America, WalletHub’s analysts compared 227 cities across six key dimensions: 1) Affordability, 2) Weather, 3) Safety, 4) Economy, 5) Education & Health and 6) Quality of Life.

We evaluated those dimensions using 49 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the most favorable conditions for beach-town living.

Finally, we determined each city’s weighted average across all metrics to calculate its total score, which we then used to rank-order all the cities in our sample.

Our sample includes all cities with populations between 10,000 and 150,000 and at least one beach listed on TripAdvisor. For metrics marked with an asterisk (*), the square root of the population was used to calculate the population size in order to avoid overcompensating for minor differences across cities.

Affordability – Total Points: 16

• Housing Costs: Full Weight (~2.67 Points)
  Note: This is a composite metric calculated as follows:
  a) Median House Price / Median Annual Household Income
  b) Median Rent Price / Median Annual Household Income
  
• Median Household Income: Full Weight (~2.67 Points)
  Note: This metric was adjusted for the cost of living.
• Median Annual Property Taxes: Full Weight (~2.67 Points)
  Note: This metric was calculated as follows: Median Real Estate Tax / Median House Price
• Share of For-Sale Waterfront Homes: Full Weight (~2.67 Points)
• Share of For-Sale Homes with RV/Boat Parking: Full Weight (~2.67 Points)
• Share of For-Sale Homes with Swimming Pools: Full Weight (2.67 Points)

Weather – Total Points: 16

• Weather: Full Weight (~4.00 Points)
  Note: This metric is based on WalletHub’s “Cities with the Best & Worst Weather” ranking.
• Water Temperature: Full Weight (~4.00 Points)
• Number of Disasters (Since 1953): Full Weight (~4.00 Points)
• Total Disaster Grants Provided per Capita: Full Weight (~4.00 Points)
  Note: This metric is based on FEMA’s Disaster Housing Assistance data visualization, which shows data from both FEMA’s Individual and Household Program and the Small Business Administration’s Disaster Home Loan Program.

Safety – Total Points: 16

• Violent Crime Rate: Full Weight (~4.00 Points)
• Property Crime Rate: Full Weight (~4.00 Points)
• Walkability: Full Weight (~4.00 Points)
• Lifeguards per Capita: Full Weight (~4.00 Points)

Economy – Total Points: 16

• Unemployment Rate: Double Weight (~4.57 Points)
• Share of Population Living Below Poverty Level: Full Weight (~2.29 Points)
• Population Growth: Full Weight (~2.29 Points)
• Income Growth: Full Weight (~2.29 Points)
• Median Credit Score: Full Weight (~2.29 Points)
• Foreclosure Rate: Full Weight (~2.29 Points)

Education & Health – Total Points: 16

• Quality of School System: Double Weight (~4.57 Points)
  Note: This metric is based on WalletHub’s “States with the Best & Worst School Systems” ranking.
• Share of Insured Population: Full Weight (~2.29 Points)
• Quality of Public Hospital System: Full Weight (~2.29 Points)
  Note: This metric is based on the Centers for Medicare & Medicaid Services’ ranking of public hospital systems.
• Quality of Air: Full Weight (~2.29 Points)
• Quality of Drinking Water: Full Weight (~2.29 Points)
• Quality of Beach Water: Full Weight (~2.29 Points)
  Note: This metric measures the percentage of received beach-water samples that exceed the Beach Action Value (BAV). BAV is the marine recreational water quality standard used to determine whether bacteria levels are unsafe for water contact. When a single marine water sample has bacteria levels at or above the BAV, a health advisory is issued. Once a health advisory is issued, beach visitors are instructed to avoid water contact until the health advisory is lifted.

Quality of Life – Total Points: 20

• Average Commute Time: Full Weight (~0.87 Points)
• Average Weekly Work Hours: Full Weight (~0.87 Points)
• Number of Attractions: Full Weight (~0.87 Points)
• Diversity of Attractions: Full Weight (~0.87 Points)
• Nightlife Establishments per Capita*: Full Weight (~0.87 Points)
• Presence on TripAdvisor’s “Top 25 Beaches”: Full Weight (~0.87 Points)
• Restaurants per Capita*: Full Weight (~0.87 Points)
• Music Venues per Capita*: Full Weight (~0.87 Points)
• Breweries per Capita*: Full Weight (~0.87 Points)
• Festivals per Capita*: Full Weight (~0.87 Points)
• Coffee Shops per Capita*: Full Weight (~0.87 Points)
• Ice Cream & Frozen Yogurt Shops per Capita*: Full Weight (~0.87 Points)
• Swimming Pools per Capita*: Full Weight (~0.87 Points)
• Public Beaches per Capita*: Full Weight (~0.87 Points)
• Boat Tours & Water Sports per Capita*: Full Weight (~0.87 Points)
• Water Parks per Capita*: Full Weight (~0.87 Points)
• Running Trails per Capita*: Full Weight (~0.87 Points)
• Walking Trails per Capita*: Full Weight (~0.87 Points)
• Fitness Centers per Capita*: Full Weight (~0.87 Points)
• Golf Courses per Capita*: Full Weight (~0.87 Points)
• Tennis Courts per Capita*: Full Weight (~0.87 Points)
• Beach Volleyball Courts per Capita*: Full Weight (~0.87 Points)
• Number of Shopping Centers: Full Weight (~0.87 Points)

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, U.S. Bureau of Labor Statistics, National Association of REALTORS, World Sea Temperature, Federal Emergency Management Agency, Federal Bureau of Investigations, Walk Score, AreaVibes, Renwood RealtyTrac, Centers for Medicare & Medicaid Services, United States Environmental Protection Agency, County Health Rankings, Natural Resources Defense Council, TransUnion, TripAdvisor, Yelp.com, Under Armour and WalletHub research.