From the Philly Inquirer:
ome prices at the Jersey Shore continue to search for a bottom, almost four years after the U.S. housing market took a downward turn.
An analysis of second-quarter 2010 sale prices in Atlantic and Cape May Counties, done by Econsult Inc. vice president Kevin Gillen for Prudential Fox & Roach, shows that the typical Shore house has lost 24 percent of its value since the market’s peak in the second quarter of 2006.
By comparison, Philadelphia’s single-family home prices fell 6.8 percent in the same period, U.S. prices dropped an average of 13.2 percent, and the average decline for New Jersey as a whole was 13.6 percent.
“This disparity is likely attributable to the fact that the market for Shore homes is disproportionately composed of vacation homes, rather than year-round primary residences,” Gillen said last week. “As foreclosures have climbed along with unemployment and mortgage delinquencies, most households are incentivized to liquidate their second home or vacation home before doing likewise to their year-round residence.”
In 2005, said Moody’s Analytics Inc. chief economist Mark Zandi, “76 percent of loans to purchase a single-family home in the Ocean City metro area were to investors – the highest in the country.”
“Yes, the boom, bubble, and bust in Jersey Shore prices is due, in significant part, to the rampant speculation in housing,” Zandi said.
Bill Mestichelli of Philadelphia has sold two vacation houses and a rental property in Ocean City in six years. Even with a dip in prices of 14.7 percent since 2006, he said, “I think the market down there is still way overpriced.
“The mortgage companies are very tight with lending for second homes without a hefty down payment,” Mestichelli said. “I plan to get back in the market in Ocean City in about two years, when I believe the prices will stabilize.”
How distressed is the Shore? Since 2007, there have been 10,527 foreclosure filings in Atlantic County, with lenders taking back 1,236 homes, according to RealtyTrac Inc., of Irvine, Calif., which tracks U.S. foreclosures. For the same period in Cape May County, there were 4,665 filings and 580 lender repossessions.
The hardest-hit town has been Atlantic City, where prices have nose-dived 63.3 percent since the market’s peak, Gillen’s analysis indicated.