Jersey Shore Real Estate Debacle

Hat Tip to the Jersey Shore Bubble Blog for the link:

From the Philidelphia Inquirer:

Forecast turns bit cloudier
By Alletta Emeno and Alan J. Heavens

Without a doubt, the Jersey Shore real estate market has had a fantastic run for the last eight years. Up and down the coastline, from the top of Ocean County to the tip of Cape May, construction boomed, sales exploded and prices skyrocketed.

An Inquirer analysis of 27,709 home sales last year in Atlantic, Cape May and Ocean Counties showed that about 1,000 houses sold for $1 million or more.

And five towns – Stone Harbor and Avalon in Cape May County and Bay Head, Harvey Cedars and Mantoloking in Ocean County – had median home prices of $1 million or more, the analysis showed. (The median is the middle value; half the houses sold for more, half sold for less. In any town, a drop in median price does not mean prices fell for all houses there.)

But this picture of sunny times is turning partly cloudy, observers of the Shore market say, as higher interest rates are beginning to dampen sales, and condo construction, mostly involving investors, adds to a growing surplus of properties.

“Whenever interest rates rise, the second-home market is the first one to take the hit,” said Fred Glick, president of US Loans Mortgage L.L.C. in Philadelphia.

“It’s the condo and lower end of the Shore market that’s taking a hit,” said Paul Leiser, a broker at Avalon Real Estate. “These are the buyers who depend on lower interest rates to balance two mortgages, and with rising interest rates, they can’t do it.

Jay Lamont, the host of “All About Real Estate” on WPEN-AM (950), who has studied and owned real estate in Ocean City for about 40 years, said, “I have never seen anything even close to this debacle. Many legitimate and qualified buyers are waiting for fall, for the lender REO [real-estate-owned] listings and foreclosure sales on failed developer loans.”

Weekly sales reported to the Ocean City MLS are 80 percent to 90 percent lower than they were in spring 2005, with seven or eight sales a week, he said.

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6 Responses to Jersey Shore Real Estate Debacle

  1. Anonymous says:

    what happens if we have
    a storm??

  2. Anonymous says:

    Look who is talking about “conflict of interest” LOL

    NAR link

    Realtors® Ask FDIC To Keep Home Depot Out of Banking

    WASHINGTON (June 6, 2006) – The acquisition of a federally insured bank by Home Depot could create potential conflicts of interest, pose risk to the nation’s financial system and discourage competition in financial services, the president of the National Association of Realtors® and presidents of all 54 state and territorial Realtor® associations told the Federal Insurance Deposit Corporation today.

  3. NAR EHS report for May,

    Existing-Home Sales Ease In May

    WASHINGTON (June 27, 2006) – Sales of existing homes experienced a minor decline in May with home prices rising near normal rates, according to the National Association of Realtors®.

    Total existing-home sales – including single-family, townhomes, condominiums and co-ops – eased 1.2 percent to a seasonally adjusted annual rate1 of 6.67 million units in May from a pace of 6.75 million in April, and were 6.6 percent below the 7.14 million-unit level in May

    David Lereah, NAR’s chief economist, said conditions are mixed around the country. “There’s now a clear pattern of slower home-sales activity in many higher cost markets, which are more sensitive to rises in interest rates, and higher home sales in moderately priced areas which have experienced job growth,” he said. “Although mortgage interest rates remain historically low, the uptrend in interest rates this year is affecting those buyers who are at the margins of affordability.”

    According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.60 percent in May, up from 6.51 percent in April; the rate was 5.72 percent in May 2005.

    The national median existing-home price2 for all housing types was $230,000 in May, up 6.0 percent from May 2005 when the median was $217,000. The median is a typical market price where half of the homes sold for more and half sold for less. “Overall price appreciation has returned to normal levels as the supply of homes on the market has risen to a balanced range,” Lereah said.

    Total housing inventory levels rose 5.5 percent at the end of May to 3.60 million existing homes available for sale, which represents a 6.5-month supply at the current sales pace.
    NAR President Thomas M. Stevens from Vienna, Va., said it’s important to keep the current market in perspective. “We didn’t break the 6-million sales barrier until 2003, so the current level of home sales is still pretty healthy by historic standards,” said Stevens, senior vice president of NRT Inc. “Housing is continuing to support the overall economy by providing a sound foundation for other sectors to grow – the normalization that is taking place in the housing market is good for the long-term health of the industry.”

    Existing condominium and cooperative housing sales rose 1.9 percent to a seasonally adjusted annual rate of 852,000 units in May from a pace of 836,000 in April, but were 6.6 percent below the 912,000-unit pace in May 2005. The median existing condo price3 was $229,300 in May, up 1.9 percent from a year earlier.

    Single-family home sales slipped 1.5 percent to a seasonally adjusted annual rate of 5.82 million in May from 5.91 million in April, and were 6.6 percent below the 6.23 million-unit level in May 2005. The median existing single-family home price was $229,700 in May, up 6.4 percent from a year ago.

    Regionally, existing-home sales in the West rose 0.7 percent to an annual pace of 1.41 million in May, but were 13.5 percent lower than May 2005. The median price in the West was $345,000, up 4.5 percent from a year ago.

    Existing-home sales in the South increased 0.4 percent to a pace of 2.62 million in May, and were 3.7 percent below May 2005. The median existing-home price in the South was $190,000, up 5.6 percent from a year earlier.

    In the Midwest, existing-home sales declined 3.8 percent in May to a level of 1.51 million, and were 5.6 percent lower than a year ago. The median price in the Midwest was $174,000, up 1.2 percent from May 2005.

    Existing-home sales in the Northeast dropped 4.2 percent to an annual sales rate of 1.13 million units in May, and were 5.0 percent below a year ago. The median price in the Northeast was $287,000, up 7.1percent from May 2005.

    The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
    # # #

  4. Anonymous says:

    ….but they don’t say how many houses were sold in May 2006. The published year-to-year number includes gains that were made during the second and third quarter of last year.

  5. Anonymous says:

    “what happens if we have
    a storm?? ” Your insurance company will drop you or raise your rates sky high.

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