This document discusses the value of waterfront and waterview properties in Rhode Island real estate. It notes that waterfront properties often sell at premiums compared to non-waterfront homes, though the size of the premium varies significantly based on factors like the specific views and location. The value of water views is very subjective but important for property taxes and individual home values. While having water access increases property values, it also increases costs like flood insurance. The document explores how real estate agents, appraisers, and municipal tax assessors attempt to determine the financial value of water views and waterfront access.

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Water
View
by Ellen Liberman
Photographs by John Supancic
OCEANFRONT. New construction designed with architectural
grace & quality craftsmanship affording panoramic views of
Pt. Judith Refuge and Block Island from every room. Sited on rare,
gated 1.3-acre lot within walking distance of Roger Wheeler Beach.
List price $2,990,000
The Multiple Listing Service (mls) cannot do justice to 77 Stanton
Avenue. The cedar-shingled, 3,464-square-foot, contemporary
Victorian rises above the modest Capes that dominate the Sand Hill
Cove neighborhood in Narragansett to meet the ultramarine of the
Atlantic and the cerulean of the sky. Words fail to capture the restless
shushing of the breakers and the salty tang delivered by the offshore
breezes. To the north, a motley mantel of orange-blue-pink umbrellas
shade the sunbathers on Roger Wheeler Beach. Due south, Block
Island crests over the waterline. And the stony arms of the Point Judith
breakwaters seem to draw the gaze forward into the endless blue.
Can one really put a price on that?
Realtors, tax assessors, scholars, insurers, hard-nosed home
sellers, and dreamy homebuyers have certainly tried. Jim Houle, a
Portsmouth-based appraiser since 1973, still remembers the very first
rule of real estate he learned in his very first certification course:
“When it comes to dealing with waterfront property, you can
forget every rule you ever learned,” he recalled.“For the most part, in
real estate appraisal work, you can cut through individual and sub-
jective and personal responses by accumulating sufficient amounts of
data, and it comes out to a fairly empirical conclusion. But, when you
deal with waterfront property, it is so subjective and so individual
and so very personal, there really is not an ability to distill it down to
a single set of parameters that gives you a clean answer to the ques-
tion: What is the value of a water view?”
THE PRICE OF PLACE
This home on Stanton Avenue in Narragansett
commands a view of Sand Hill Cove.

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FOCUS ON WATE R

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Estate International, which has been selling high-end
waterfront property in Rhode Island since 1964.“How
rare is it? Do you hear sounds? Do you see a sunset?
What are the components that make it special?”
Municipal tax assessors take their cues from
the data.
“I don’t look at the water, I look at what someone
else paid for that waterfront, and that’s how I decide
the value of the property,” says Allan Booth, a tax
assessor since 1984 who currently works for the city
of Newport and the town of Narragansett.“The market
tells an appraiser and an assessor what the values
are in an area. Waterfront and waterview amenities
certainly enhance the tax base.”
Depending on how much coastline a municipality
has in its portfolio and its share of the total tax base,
the impact can range from a blip on the bottom line
to the properties that carry the budget. Warwick, for
example, has 40,822 parcels of stand-alone residential
properties (excluding condominiums) representing
$10.5 billion in assessed value. Waterfront and water-
view homes are valued at $8.79 million—repre-
senting only 8.3 percent of the total. Further, the city’s
coastal properties represent each extreme in the
range of values.
“When people think of Warwick, they think of
malls and the airport, but the city actually has 39 miles
of coastline—more coastline than most commu-
nities,” says Warwick Mayor Scott Avedisian.“But, the
same body of water separates the highest tax bill
for a home on Warwick Neck to the lowest tax bill for
a home in Oakland Beach.”
For Charlestown, with a $2.36 billion tax base and
very little commercial or industrial real estate, its
water view is its wealth. Bisected by Route 1, the
town’s southern half has 22,000 acres encompassing
Atlantic-facing sandy barrier beaches, bordered inland
by Ninigret and Quonochontaug salt ponds; its wooded
northern half comprises about 35,000 taxable acres.
Yet with fewer parcels, the south side’s total assess-
ment is $1.56 billion, versus $814 million on the north
side of Route 1. Not only is Charlestown’s seaward
land considerably more valuable, its occupants—retir-
ees and second-homeowners—tend to use fewer town
services, as their children went to school elsewhere,
and their homes may be unoccupied in the winter.
While the town’s entire tax base has tripled since
1993 due to the increase in residential land values,
the south side of town makes a disproportionate con-
tribution to the town revenues, says Tax Assessor
Kenneth Swain.
“Without the waterfront, Charlestown would be
like Hopkinton, because of the weight on residential
versus commercial and industrial land,” he says.“Our
taxes would be significantly higher.”
The housing sector is a powerful economic en-
gine, with residential investment and housing-related
spending at its peak comprising up to 18 percent of
the nation’s gross domestic product. Real estate in
proximity to the water shifts it into high gear. At the
peak of the market in the 1980s and 1990s, real estate
researchers determined that the premium for the
best water views ranged from 60 to 100 percent, and
120 to 200 percent for waterfront. According to a more
recent market analysis by the real estate company
Zillow, the median value of waterfront properties com-
pared to that of all homes rose from 64 percent in
1994 to 116 percent today.
Rhode Island is famously blessed with 384 miles
of coastline. And, in early August, the mls identified
3,948 properties with the word “water” in the descrip-
tion, ranging from a two-bedroom, 529-square-foot
shoebox in Galilee for $89,000 to a $19 million man-
sion on Newport’s Ocean Avenue. Determining the
premium associated with the ability to install a dock,
or step out onto a sandy beach, or even spy a scrap
of waterscape from a third-floor window is as critical
for municipal budgets as it is for individual wealth.
Earl D. Benson, a professor of finance at Western
Washington University who has co-written several
papers on the topic, says that developing mathematical
models that can quantify the value of a water view
by its quality is a more recent development in real
estate research, but one that has interest beyond
scholarly circles.
“It’s a very big issue for people who have views that
get destroyed and some cities even have ordinances
that if there is something that harms someone’s view,
they have to be compensated,” he says.“So it’s really
important to lots of segments of people—from city
government to developers to homeowners to lawyers.”
In practice, the market determines the current
value of a water view. Realtors, who help home sellers
set the price, say it is more art than science.
“You have to look at comparable properties. You
also have to feel it in your gut, and have the experience
to decipher what type of waterfront property it really
is,” says Melanie Delman, president of Lila Delman Real
FOCUS ON ECONOMY
THE PREMIUM FOR
THE BEST WATER
VIEWS REACHED
100 PERCENT

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“The value of a water view for us—it’s an escape
from my husband’s busy job. There’s something so
calming about the water, very peaceful—meditative,”
she says. But McGowan, who got her real estate license
to sell her former home, wants the right house, in the
right location, at the right price.
The current listing price of $535,000 is a step
down from the original $595,000 list price and a steep
drop from the $800,000 the current owners paid
for it in 2004. Benson’s most recent research on the
value of water views, a 2013 analysis of 25 years of
housing sales data for homes in Bellingham, Washing-
ton, showed that the premium for waterview proper-
ties fluctuates with the booms and busts of the entire
real estate market.
West’s experience has told her the same thing:
“Even if you look in recent times—the market went
crazy in ’05, ’06, ’07, and then in ’08 it just stopped
and real estate went way, way down,” she says.“We are
just now getting back to those prices—but waterfront
gets there first.”
Nonetheless, 1236 Anthony has been a hard sell,
with only one low-ball offer in five months on the
market. Water views also come with liabilities, West
acknowledges, and one of the biggest in recent years is
the cost of flood insurance. Currently, about 5.5 million
homes are covered by the National Flood Insurance1236 Anthony Road has 360 degrees of water views.
FOCUS ON ECONOMY
WATER, WATER EVERYWHERE. Views on all sides
from this spacious contemporary. Sunset, bridge, and
bay views. Open floor plan. Great room with gas stove
and vaulted ceiling. Living and dining open to deck.
Walk to bay. Mooring possible or marina nearby. List
Price $535,000
Built in 1997, the two-bedroom, three-story at 1236
Anthony Road in Portsmouth’s Common Fence Point
literally sits between two different bodies of water.
The neighborhood occupies Aquidneck Island’s north-
ernmost tip, a finger of land pointing to the upper-
reaches of Mount Hope Bay. From the stairway landing,
you can look eastward over the Sakonnet River to
Tiverton and Little Compton. Across the sweep of
the back deck, sailboats make a lazy passage along the
Bristol shoreline from the Mount Hope Bridge. Chris
West, a real estate agent with Gustave White Sotheby’s
International Realty, waits patiently in the sauna of a
late July afternoon for a buyer to be amazed by the 360
degrees of sea and sky.
Laurie McGowan, a Newport resident who traded
the water view of her last home in Portsmouth’s Black
Point neighborhood for the convenience of an in-town
rental, doesn’t miss an opportunity to find a way back.

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WATERVIEW COTTAGE. Fabulous unobstructed
waterviews from most rooms. Balcony off master
bedroom. Close to marina, bike path, and parks. Enjoy
waterfront living year round. Subject to probate
court approval. List price: $319,000
Hard to believe now, but there was a time when liv-
ing on the water was considered a folly. A man who
made his living fishing might require a house with a
dock. Otherwise, many houses turned their backs on
the views—no sliders, Palladian windows, or soaring
towers to dominate Narragansett Bay. James Rhodes,
who built Roselawn on Bellevue Avenue in 1854, was
roundly chided by a friend for the recklessness of
constructing a home so near to the ocean. He wrote:
“I never thought you’d be such a damned fool and I
expect to hear any day that you’ve been drowned.”
Assessor Allan Booth likes to tell the story of the
Newport contractor who, 30 years ago, turned down
a waterfront parcel in Jamestown from a customer in
lieu of a $1,800 cash balance on a job. The land sold a
couple of years ago for $1.8 million.
And yet, from the late 1800s on, Rhode Islanders
were busy colonizing their shores. Hotels with dining
halls and religious summer camps gave way to beach
communities. Even if your summer cottage was just a
“shore tent”—five rooms and a porch—you could still
enjoy a Vanderbilt’s view. Some of those properties
still abide as trophy second or third vacation homes,
but many simply became the suburbs. Barrington, with
four rivers braided within the town borders, attracted
developers, who, beginning in the 1850s, sliced some of
the old farms and coast into truffle-thin plats to meet
the demand for small houses.
The house at 37 Shore Drive was built in 1920,
but the Bay Spring neighborhood began as a Victorian
summer community. It crams in 1,500 square feet of
living space on a 2,000 square-foot lot. Architectur-
ally undistinguished, the house looks down-on-its-
heels. But from the crudely constructed front porch, it
commands a magnificent panorama of the Providence
River, northward from Bullock’s Cove, all the way down
to the Newport Bridge.
“People make sacrifices to live near the water,” says
Realtor Ian Barnacle of Residential Properties. “A lot
of houses on the water are smaller than people might
want, and you have to edit your life to fit it. But,
people buy the location above everything because you
can change a house, but you can’t change a spot.”
But even the affordable spots are threatened. In
East Providence, waterfront property owners revolted
over assessments that leapt as high as 50 percent since
the city’s last revaluation in 2012. The City Council
responded by voting to ask the General Assembly for
authority to cap assessments at a maximum of 15 per-
FOCUS ON ECONOMY
Program, established in 1968 to give homeowners an
opportunity to protect coastal properties, after the
private market abandoned that segment of the busi-
ness. The federal government has been heavily sub-
sidizing flood insurance premiums for existing homes
ever since, and flood insurance is a requirement for
any mortgagee in a flood-prone area with a federally-
backed mortgage.
In 2012, after payouts from 2005 Hurricanes Ka-
trina and Rita pushed the program $24 billion into the
red, Congress passed the Biggert-Waters Flood Insur-
ance Reform and Modernization Act, which increased
insurance premiums 25 percent a year, until they
reached full-risk rates for businesses, second homes,
and properties with repetitive losses. The changes
only affected about 20 percent of policy holders, but
their rage was enough to force Congress to hastily pass
a measure in 2014 to delay the premium increases.
The National Flood Insurance Program is due to
be re-authorized in 2017, and the Federal Emergency
Management Agency, which manages it, has been
studying ways to balance its financial sustainability
with affordability. Two reports recently issued by the
National Academy of Sciences’ Committee on the
Affordability of National Flood Insurance Program
Premiums attest to how difficult that will be. To keep
policies affordable, the program must increase the
number of purchasers, which are currently concentrated
in Special Flood Hazard Areas in Louisiana, Texas,
and Florida. Any program reforms would have to define
affordability and determine who is eligible for assis-
tance, and in what form.
“I think there’s no way this program can thrive
unless the affordability issue is addressed,” says
Howard Kunreuther, a public policy professor,
co-director of the Risk Management and Decision
Processes Center at the University of Pennsylvania’s
Wharton School, and a member of the committee.
He has proposed that insurance premiums reflect risk,
in a program that provides vouchers for those who
implement cost-effective flood mitigation.
“If homeowners are required to do that and receive
a loan to spread the mitigation cost over the life of
the mortgage, it will reduce the homeowner’s cost as
well as the federal government’s voucher expenditures.
Everyone will be better off in the long run.”
In the meantime, 1236 Anthony’s liabilities have
cast a pall over its panoramic views.
“I’m having a very difficult time selling the house,”
West says.“The taxes on top of the flood insurance
are affecting how someone could afford a $535,000
house. The program only gives them $250,000 in flood
insurance. With a $5,000 flood insurance and $7,300
in tax, that’s another $1,000 a month on top of your
mortgage and utilities to carry the house.”

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FOCUS ON WATE R
cent over a previous year—a move that would force
the city’s other taxpayers to essentially subsidize prop-
erty owners with more valuable real estate.
Houle expects the upward pressure on the value of
a water view to continue. The demand was created by
a confluence of sociological and economic influences in
the late 19th and 20th centuries: access to the shore
via trains, trolleys, and then automobiles; the emerging
concept of a vacation; and the prosperity of the post-
World War II era that gave a middle-class family
the means to buy the available waterfront and water-
view homes.
“A lot was changing by the 1980s; the supply was
shrinking. You had the rising power of the Coastal
Resources Management Council interested in further
reducing the ability to use waterfront—requirements
for set-backs and septic systems,” he says. “As the
supply got eaten up, the demand increased.” In
this century, climate change may reduce the supply
even further.
“It will be economically unfeasible to keep bail-
ing people out, and the regulators are going to have to
force people back from the water.”
And yet, we value our water views enough to keep
pushing forward. Carey Bell pops out of the house next
door to assess a stranger’s interest in 37 Shore Drive.
Fifteen years ago, she moved from her in-town home
to the cozy confines of cottage living, cheek-by-jowl
with an eclectic mix of neighbors. She enthused about
the house’s front row seat to a real working waterfront,
with the constant parade of tankers headed for the Port
of Providence.
“This is Barrington’s most hidden treasure,” she
says. “I don’t think you ever get tired of living on
the water.”
From the porch of a modest home on Shore Drive in
Barrington you can see the Newport Bridge.