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Florida Series: House, Land, or View?

We all have noticed the extreme price differences between say, a house directly on the water, and the exact same house across the street. This is evident all over the country, with the gap being more pronounced in some hot areas, like Florida. A friend of mine owns a beautiful home in Key Largo, across the street from oceanfront homes. His house has a tiny sliver of ocean view and is worth roughly a million dollars in today's market.

A similar house across from him, but right on the ocean, is on the market for $2.5 million, the only substantial difference being the view. I own a 1.3-acre lot on a huge lake in northwestern Maine, that is probably worth about $500K. I can buy a nearby ten-acre "backlot" for about $50K, with no view, but with "deeded lake access."

In the Florida Keys, where we are looking to buy a home, This is the norm. We have seen new and relatively new homes on good size lots in nice neighborhoods, with listing prices at a fraction of those for some old, tired houses not built to hurricane or flood level specs, but on the water. They are usually on postage stamp lots, where you can practically reach out and touch your neighbor's house. Many of the ocean, bay, or canal front homes have little or no vegetation on them, with their landscaping consisting entirely of crushed stone. However, you will have frontage on a waterway with a dock and lift for your boat, or the mesmerizing views from every room of a bayfront or oceanfront home.

What to do? Obviously, if cost is irrelevant to the buyer, everything is easy. Go to the Ocean Reef Club in Key Largo and buy a 10,000+ square foot oceanfront mansion, on a multi-acre lot with exquisite "old Florida" landscaping, and a dock for your boat on the other side of the street. Paradise! Unfortunately, most of us can't afford the $20 million+ dollar price tag, nor the $250K or so per year to maintain it (That's assuming you have no mortgage or course.) In the real world, you must make choices, and they aren't easy. At a price point that you can comfortably afford, what is more, important to you; a mind-blowing front seat view of the bay or the ocean, a large, beautifully landscaped lot with a recently built, gorgeous house, or a house on a canal with dockage for your boat? At the same price, you just can't have all three, or even two of these amenities.

Aerial view of Waterfront homes in Florida Keys

It has been very hard to make this choice; however, we usually seem to be willing to overlook a lot of downsides to get the dazzling view. Another option is to find a tired house with that view- a "fixer-upper," but they are not easy to find, especially at a decent price. A third option is to buy a lot and build exactly what you want. Having been a developer and builder all my life, this path has a lot of appeal to me. But the problems are many, especially in the Keys. There are often "controlled growth" restrictions on obtaining building permits. If you find a lot that is already approved for immediate construction, it will cost more money than one where bylaws would delay a building permit for many months, or even years. Building a home to hurricane and flood plain specs in coastal Florida entails construction methods that are unfamiliar to northern builders. Add to that the current labor shortages and lack of available quality builders, and you then face the prospect of very high construction costs. Some materials now have long delivery times when ordered and can cause lengthy delays. Suppliers will often only quote "prevailing price at the time of delivery," while still requiring a substantial deposit with the order. Accordingly, builders must now protect themselves with price increase clauses, leaving the client open to unknown price hikes. Read that contract carefully; better yet, have your lawyer read it carefully.

These things considered; we have pretty much ruled out the possibility of building a custom house at this time. Perhaps we will get lucky and find that well-built "fixer-upper" on a waterfront lot. If you find yourself in a similar position, I can only suggest that you constantly watch the listings in the areas where you have decided you would like to be and be patient. Sooner or later, you will find what you want. Or you can plop down the $20+ million for the oceanfront mansion and be done with it!

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