A Reflection of the 2004 Sales and Rental
Real Estate Market

Whether you are a Jersey shore property owner, local merchant, or frequent vacationer, you can't help but notice the change that has taken place at your favorite Jersey shore community over the last 5 years. Relatively quiet towns with modest homes have been transformed with large single, double and condominium properties. Traffic has increased, and new construction is everywhere. Prices of shore real estate have skyrocketed. What has been fueling this transformation? And will it continue? These and other questions were posed to three experienced real estate agents in South Jersey.

Randy Leiser of Avalon Real Estate, has 10 years experience selling real estate in the Avalon-Stone Harbor communities. According to Randy, over the last few years the Internet has had a major impact on both the sales and rental markets. "The Internet has changed the business by reducing the time an agent spends with people face-to-face. Time savings is positive, but the drawback is that it is harder to establish relationships." He also has seen a trend of people traveling greater distances, such as from Maryland, to enjoy some time at the Jersey Shore. In the same sense, people that used to come to the Jersey Shore for long periods of time are tending to spend a shorter amount of time here and travelling to other places. Still, Avalon Real Estate’s core clients are coming from suburban Philadelphia.

According to Randy, Avalon has seen a 20% annual increase in sale prices over the last couple of years. "In 2003 the median home sale price was $777,000, while in 2004 it is $930,000," he related. Rentals have been steady, both in number of units rented and rental rates. This compares to 1997-1999, when the rental market was experiencing strong growth.

When asked to look into the crystal ball, Randy said, "So far we have not seen signs that the demand is decreasing. But we're getting into the traditionally "quiet" holiday period. In the first few weeks of 2005, we'll be able to better gauge where the market is going."

So who is buying in the Avalon-Stone Harbor area? Randy said, "Suburban Philly people in their mid 40's and up who are very successful. About a third are cash buyers, and most buy vacation homes for personal use."

Ray Lombardi of NJ Realty, Sea Isle City, has 17 years experience selling real estate in the Sea Isle City area. His wife, Marianne, is also a real estate agent who handles the rentals out of NJ Realty, so between the two of them, they have the pulse of Sea Isle City real estate.

Ray notes, "Over the last five years, prices have tripled here. There is a lack of inventory except new construction, which is at least half of the sales in Sea Isle City. Prices for new construction side-by-sides went up $250,000 over the last year and a half, from $500,000 to $750,000. If priced right, they sell in 30-60 days."

Ray believes that new construction twins are the best buy right now. "They are maintenance-free, rent well, and are easier to re-sell", he says.

In Sea Isle City, like in Avalon, the predominant buyers are baby boomers who vacationed at the shore when they were kids and have migrated back as adults. Some buyers are former "group" renters now with families who are doing well financially.

Regarding rentals, Ray said the "rates have not increased or have just increased slightly, however nowhere keeping pace with the cost of the home". In all likelihood then, thinks Ray, "People who are buying in Sea Isle City are doing so hoping that the properties will continue to appreciate in value, rather than relying on rental income".

When he was asked about what he expects in the near future, Ray said that the trend of people buying in hopes that the property value will appreciate is likely to continue. Although mortgage interest rates have gone up elsewhere, they have not changed at the shore, so the low rates continue to fuel the market.

Carole PantaloneOur last real estate pro with 30 years experience in the Wildwoods, Carole Pantalone of Hoffman Agencies, Inc. in Wildwood, also weighed in on the market she knows well. She had three words for what's happened in the Wildwoods over the last five year - "Boom, Boom, Boom!" Wildwood has been very active of late. She also predicts that the market will remain strong through the next year. She believes that Wildwood is the place to be for investors, referring to it as the "last frontier" of affordable real estate at the shore and many investors have done very well. Carole also believes that rising interest rates elsewhere have not yet affected the enthusiasm of buyers in the Wildwood area. Who is buying in the Wildwoods? "Baby boomers, executives, investors - all of the above", says Carole.

On the subject of rentals, Carole said, "Wildwood has tons of inventory - the people that used to be tenants are now landlords ". She indicated that income from rentals to cover expenses has been "tight", mainly because of the tremendous rental inventory and vacancy rate this past summer. Carole feels that there is a strong possibility that 2005 will be better because a lot of the units that have been previously been under construction for the summer of 2004 season are now complete and the owners will have all winter and spring to try to rent them for next season.

Carole's prospects for the future of real estate in Wildwood? "Up - I hope!! Our beaches are fabulous, our boardwalk offers entertainment for the entire family, and the real estate values are great. " With so much to offer the vacationer and investor alike as well as affordable shore property, Wildwood should continue to do well next year.

After speaking with these three real estate pros and others around the shore area over the summer and fall, we sense a feeling of cautious optimism. Many believe that the hot shore market is not sustainable in the long run, but in some of the shore communities, demand has been strong for five years or more. And remember that even in "down" times, like in the early 1990's, shore homes traditionally hold their value better than in non-resort areas, since owners can rent them to make ends meet rather than use them themselves. Plus, as more baby boomers approach retirement, having a summer home at the shore keeps looking better and better, especially when compared to the stock market's overall performance over the last five years. And unless interest rates skyrocket or the stock market returns to its heyday of the late 1990's, the appeal of a shore home - for living or investment - will likely remain strong. And, as they say, "They aren't making any more shoreline!" As small older cottages are torn down for fabulous singles or twins, buildable lots will become more and more scarce. This can only continue to fuel the upward pressure on Jersey Shore real estate rentals.

But what about those lackluster rentals of the last five years? New Jersey needs to do a better job marketing the shore nationally as a destination of choice for families. According to Randy Leiser, who attended a statewide meeting on Jersey Shore tourism recently, New Jersey ranks 9th in state tourism revenue, but fails to make the top 30 when non-visitors are asked of the state they'd most like to visit. So, New Jersey's tourism gurus need to sharpen their pencils to increase the most recent 1.2% tourism revenue growth rate. With an election for governor coming up in 2005, we hope that shore tourism will be on the top of his or her agenda!

Next topic for the Shorebreeze.com Newsletter

In the Winter 2005 issue, due out in January, we'll discuss the what the changing real estate landscape and vacationing trends over the last five years have done for retail businesses at the shore.

Want to discuss the real estate market, rental issues and other hot Jersey Shore topics with your peers? Try the Shorebreeze.com Bulletin Board!

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