Home Economics: Shore realty: A good time for dipping in

Houses on the bay at Ocean City, N.J. It's still a buyer's market at the Jersey Shore, realty experts in the region say, though sellers are holding fast to their bottom line.
Houses on the bay at Ocean City, N.J. It's still a buyer's market at the Jersey Shore, realty experts in the region say, though sellers are holding fast to their bottom line. (STEVEN M. FALK / Staff Photographer)
Posted: July 08, 2011

There's been a lot of talk lately about how affordable the Jersey Shore has become. If you've always wanted that barrier-island retreat, now may really be the time to buy.

Prices have plummeted in Atlantic and Cape May Counties since the Shore real estate boom ended in 2006. Economist Kevin Gillen, vice president at Econsult Corp. in Philadelphia, reckons the drop averaged 32 percent for a typical seashore house by the end of first quarter of 2011.

For comparison, the Federal Housing Finance Agency says average home values have fallen 21 percent nationwide, 16 percent in Philadelphia, and 14 percent in New Jersey.

Although price declines are moderating overall, Gillen maintained, Shore sales remain well below average even for the winter months. If there aren't enough houses in the sample of sales used to measure price changes, the result may be values that seem more volatile than they really are.

The second quarter has just ended, and it won't be known for a few weeks what Shore sales were like in that all-important springtime market.

Still, if you're renting at the Shore for a week, or planning a day trip to the beach, you might want to take a look at what's for sale.

How do you buy at the Shore in today's market?

Realtor Allan Domb is a denizen of Center City and its high-rise condo buildings, but he not only has a getaway in Longport, he also owns several rental properties there, too. How would he recommend shopping for a Shore house?

Choose a price range, he said, such as $500,000 to $550,000, and look at all the available listings between those parameters.

"I would isolate five or 10 homes and make lower offers on each," Domb said. "If the first seller rejects the offer, just move on to the next, and to the next again, until someone finally accepts it."

These days, "there is a small percentage of people who must sell, so if you offer $400,000 for a $500,000 listing and come back a week later and offer $425,000, they may take it," he said.

John Duffy, president of Duffy Real Estate on the Main Line and owner of a house in Ocean City, said, "Obviously, one can now go online and find most, if not all, of the current listings.

"What I have found out about the market 'down there' is you should first determine your preferred location, such as Ocean City, Strathmere, Avalon, and the like, because many Shore agents don't stray from their immediate location."

Once you have decided where you want to look, contact a real estate agent "who has experience in both the good and bad markets at the Shore," Duffy said.

It's important to study resales from the last three to six months, he said, and "find out the true rental history of these properties, because many buyers will want to rent their property out to defray their carrying costs for the first few years."

To get that true picture, "ask to see actual leases for the past year," Duffy said.

Many prospective Shore buyers say they are looking for short sales, in which the bank agrees to take less than the seller owes on the mortgage, he said, or houses repossessed by lenders.

"They are not as common as one may think," Duffy said. In addition, buyers may have difficulty obtaining title insurance on a foreclosed home because of moratoriums on writing policies in some Shore areas with high rates of distressed properties.

One group with which today's Shore buyers are unlikely to be competing: investors.

"The economics of the rent you will receive vs. the price you pay doesn't make sense," Domb said.

Economist Joel L. Naroff, who built a house at the Shore a few years back, said the rebound in the equity markets had meant more wealth to some buyers, "and they see prices as being quite reasonable and are snapping up properties."

"It still seems to be a buyer's market in most areas, though sellers seem to have decided what their bottom line is and are holding to it," Naroff said. "With few spec houses out there, if people don't have to sell, they will not take any lowball offer.

"Thus, having a buyer's market doesn't mean people can make any offer."

Although several mortgage brokers said qualified buyers were having little trouble obtaining loans for second houses at the Shore in these tight-money times, there are a lot of cash buyers in the market.

"Off the top of my head, I'd guess we have 25 percent to 35 percent cash buyers," said Paul Leiser, broker/owner of Avalon Real Estate, who sells there and in Stone Harbor.

Leiser said "strong buyers" sometimes would make cash offers with quick settlement dates, and bring financing to the table provided by a lender with whom they have a continuing relationship, business or otherwise.

"The higher up you go in the food chain, the greater the likelihood the buyer is paying cash for the property," he said. "A $7 million sale is far more likely to be a cash deal than a $1 million sale."


Contact real estate writer Alan J. Heavens at 215-854-2472, aheavens@phillynews.com, or @alheavens on Twitter.

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