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
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
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.
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.
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