It’s been a while since I hit this topic, but it’s about time we circled back to the awesome BLUEMiND2 conference that was held on the Outer Banks in early June.
You can find more info about the conference in our Blue Mind blog category or on our webpage dedicated to the Blue Mind event, but for this post, I want to focus on a specific talk from the BM2 conference; “The Ocean View Premium.”
How much is the ocean view worth? And is the value worth the added cost?
As I discussed in a recent post about planning an Outer Banks vacation, we understand the trials and tribulations that go into organizing a vacation. One of the largest challenges for the planners is choosing the house, and a difficult aspect of that choice is location.
Should you go front row, i.e. oceanfront, or should you save a little money and be a little further from the beach?
We can always walk to the beach, right? And the money we save can be used in other ways – food, equipment rentals, souvenirs…maybe even a great new IPad to bring with us! Is this the right trade-off?
Oceanfront vacation rental homes can be expensive, but are they really worth the added costs? This was one of the questions we tried to tackle at the Blue Mind conference.
We recruited Gordon Jones, local OBX resident and President of Coldwell Banker Seaside Realty for 22 years, and Dr. Scott Huettel, a Duke University neuroscience professor to, dissect the “Ocean View Premium” from a practical, real estate perspective and a scientific mind/reward perspective. The results are not unexpected, but also very fascinating.
Below is the full video of the presentations, and you can find the PowerPoint presentations on SlideShare. But to save you some time, I’ll breakdown some of the highlights.
To help us put a value on the oceanfront, I’ll start with some tangible numbers from the OBX real estate world courtesy of Gordon, and then we’ll work our way to the domain of the mind and whether this added value is worth the cost with the help of Scott.
Here is a chart with the 10 year averages for Outer Banks land lots – as expected, oceanfront carries a higher cost…in fact, more than 40% higher!
|Oceanfront- Front Row||
|Semi-oceanfront- 2nd Row||
And the vacation rental costs are similar in proportion:
Clearly there is an added cost to be on the ocean – 40% or more! So, is the added value really worth the added cost?
In Dr. Huettel’s presentation, he tackled the difficult questions of… “Why do we value something?” AND “How do we trade off between different things we value?”
Whew! No easy task. Luckily, we had a neuroscientist on the job.
Dr. Huettel went on to explain that deciding between goods (i.e. IPhone vs. Android) is relatively easy for us. Our brains can process these decisions pretty quickly. As we move on to choosing one experience vs. another experience it gets a bit more difficult, and when we have to choose between an experience and a good…uh oh!
As Dr. Huettel stated it:
“Decisions involving tradeoffs between goods (e.g., money) and experiences (e.g., a view) are difficult because they involve different value computations in the brain.”
Dr. Huettel has conducted some amazing research at his Duke neuroscience lab to help us understand how we make these trade-off decisions, and his below video presentation is very fascinating, but I’ll cut to the chase for the sake of brevity.
Dr. Huettel believes that we tend to undervalue experiences when we make decisions, and as a result, he was able to pull out some underlying principles to help us with difficult oceanfront decisions.
- Principle 1: We value memories (much more than we realize)
- Principle 2: Goods can (and should) be traded for experiences
And he offers this summary…
- Experiences carry value…
- … by containing information.
- … by generating memories.
- Experiences can be obtained/traded for goods…
- … through a “common currency” for value.
- … with positive long-term consequences.
Keep in mind, this is a PhD, Dr. of Neuroscience from Duke University. Pretty good cred right? This isn’t just a marketing dude trying to sell you a more expensive house – ah hem…those dude’s are pretty cool too.
As Dr. Huettel says, don’t underestimate the value of your experience, “purchase the ocean view!“
So, to close, spend the extra money on the house…not the t-shirt! :)