Shore Home Prices Holding

Shore home prices, sales escape brunt of market downturn

Saturday, January 19, 2008
By WILLIAM H. SOKOLIC
Courier-Post Staff

AVALON
Chip Moran just put the family vacation house up for sale.

His father died in July and his mother is in an assisted living facility. Selling the house would help offset the costs for his mother's arrangement, said the Westmont resident.

Moran and his two brothers are asking $2.1 million for the five-bedroom, beach block house on 20th Street. His parents paid about $350,000 for it in the early 1980s.

"If it sells for the price we're looking for, that's the best. But there's no rush on our part. If it doesn't sell and we end up keeping the house, great," Moran said.

The Moran situation typifies the real estate market at the Jersey Shore as the new year unfolds.

While the home-sale market nationwide has gotten hammered since the real estate bubble burst in 2005, the shore has weathered the downturn better than much of the country, said Drew Fishman, president of the New Jersey Association of Realtors.

As a corollary, the repossession market has not hit the shore area, said Lester Argus, president of the Atlantic City & County Board of Realtors. Because so much of the market consists of second homes, neither sellers nor buyers are pressed to transact a sale.

"The shore does better because buying and selling are discretionary," said Richard Perniciaro, director of the Center for Regional and Business Research at Atlantic Cape Community College.

"People are not moving in or out for jobs. Most are in a position to wait a year or two to sell," said Matthew Iannone, president of Freda Real Estate in Sea Isle City.

Yet, real estate experts say the time is better than ever to buy. Prices have come down from the bloated figures of a few years ago. Interest rates are favorable, dipping below 6 percent.

And inventory is high.

"There's more inventory than buyers by a 4-1 margin," said Alex Linsk, a Realtor with Farley & Ferry Realty Inc. in Margate. "Lenders are anxious to get the market started and lend, but they will look a little closer into the buyer's credit history. Still, it doesn't cost anything to make an offer."

Back in 2005, there was a dramatic increase in the number of homes on the market at the same time buyers throttled back, said Randy Leiser, a Realtor with Avalon Real Estate Agency.

"Demand decreased, supply increased, and there were more on the market ever since."

The ups and downs are a cyclical thing, Linsk said. "It happens every seven or eight years. I've seen it three times since the early 1980s."

A lot of professionals, steeped with cash in 2002 and 2003, were sold on real estate.

"They didn't think there would be an end to the boom. Now they're paying the price. They can't sell their properties. Those who spent $500,000 to $1.5 million and thought they can flip with a 20 percent increase, they got hurt," Linsk said.

In 2005, the last strong year at the shore, some 435 units sold in Avalon and Stone Harbor.

Last year, the figures were around 300, Leiser said. But the turnaround began this past year.

"We had a good run in 2007, much better than 2006," Iannone said.

The market experienced a 13 percent drop in the volume of sales in the last year. But prices have not taken the hit other areas did, Argus said.

In Ocean City, the number of sales was up compared to 2006. November and December numbers picked up over the previous year by as much as 25 percent, Fishman said.

"It's not 2005, but it's not bad, and the dollar amounts are well ahead," Fishman said.

Said Iannone, "The asking and selling prices are not far off nowadays. We haven't had a distress sale to any great extent." Certainly, sellers are not going below what they paid for the property, Leiser said.

"One unit came on the market at $740,000 two years ago. It came off for a while, then went back on for $649,000. However, the folks paid $200,000 10 years ago. What has happened, sellers have gotten the message and depending on the situation, are reducing asking prices."

The average sales price has declined from $1.7 million in 2006 to $1.57 in 2007 in Avalon and Stone Harbor.

"The market is not as strong as we'd like it to be," Argus said. "But indicators for 2008 are looking pretty good. Mortgage companies are getting a lot more activity. We hope that translates into sales."

"We believe barring any major economic disaster, there's no cause for a further decline in values during the next 12 months," said Ian Lazarus, president of the Cape May County Association of Realtors.

Moreover, interest rates tend to ease in a presidential election year, he said. Outside of some high-end properties, Realtors aren't seeing bidding wars anymore.

"Buyers can take their time for inspections and due diligence. I think lots of buyers are on the fence figuring when they can get a good buy. Sellers are willing to negotiate," Leiser said.

Not Moran and his brothers. Then again, they don't really have to. Properties over $1.5 million sold even when the market turned, Linsk said.

Shore home buyers come in with their own financing, and larger down payments. They come in with more income. In Ocean City, there was a bidding war for a million dollar home that sold for over the asking price, Fishman said.

So the prospects look good for Moran, a 47-year-old facility manager.

If the house sells, he has a condo on 78th Street in Avalon he'll use more often. Or he and his brothers will get together and buy something else a little less expensive.

"The Jersey Shore is great. I've been all over the country. I'll put Jersey beaches against anybody," he said.

Reach William H. Sokolic at (609) 823-9159 or bsokolic@camden.gannett.com