To be effective underwater, they need three to five things:
- Darkvision. Elves get this already.
- Swim speed. I cost this at 1/4 of a feat.
- Water breathing, or holding breath for an extended duration. This is a fairly weak ability, I cost it at 1/10 of a feat, about half the cost of a cantrip.
- Spell casters also need a way to cast spells with vocalized components. and Bards need a way to perform too.
- You may also need the ability to water proof items, and prevent them from corroding in the highly corrosive salt water environment.
The Sea Elf heritage could give Sea Elves a cantrip without verbal component with target self that permits breathing and vocalizing underwater while concentrating on it. (This is consistent with a heritage like High Elf that grants a cantrip.) Ah, there's the Circular Breathing cantrip for this purpose.
The 2nd level spell Alter Self gives Amphibian as one of the options, allowing you to breath underwater and gain a swim speed, while you concentrate for up to one hour. A spell that only gave that benefit would be 1st level in my opinion, and also suitable as a starting heritage ability - it could be regained on a short rest.
Another possibility is for them at 3rd character level to optionally gain the use of the Subtle Spell metamagic, once per short rest, allowing a spell to be cast without vocalized or seen components. (This is essentially a weaker version of the Metamagic Adept feat.) Non-spell casters should get an alternate power instead, like the ability to move and attack underwater without penalty (à la Freedom of Movement) for an hour. I'd cost this at 1/4 of a feat.
From a DM perspective, this is all a bit moot. Either you have an adventuring party where there's a mechanism for everyone to adventure underwater, such as the Water Breathing spell or everyone is a water dwelling or amphibious race; or your adventures are mostly not in the water. So unless all the PCs are using racial abilities or magic items (i.e., there's some cost to this), the Sea Elf racial abilities have little benefit on a regular adventure.