June 2006 News

Jun. 26--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.

Stories abound of overnight fortunes made by investors, like the one who flipped an Ocean City property in one day last year and made a $540,000 profit on a $4.1 million house.

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.

Long-term rates climbed to 6.71 percent Thursday, Freddie Mac reported, the highest since May 31, 2002. Adjustable-rate mortgages are at 6.4 percent.

"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.

"We've sold fewer units, but our dollar volume in the first quarter was higher than it was in the first quarter of 2005, which was a record year," Leiser said. "It's the million-dollar-house purchases that push up the medians, and those are usually cash. And when you are talking about million-dollar houses, consider that an older rancher three blocks from the beach in Stone Harbor is $1.4 million."

The Inquirer's analysis showed the median price of homes in the three counties grew at a slower pace in 2005, to $274,000, a 16 percent increase over 2004 compared to a 21 percent jump the year before.

Only Atlantic County was able to maintain the same rate of growth from 2004 to 2005; its median home price rose 24 percent, to $223,357.

In Cape May County, the year-over-year median gain was less than half the increase experienced a year earlier. The median was up 11 percent in 2005, to $391,000, compared to a 26 percent gain in 2004.

Ocean County's median grew 15 percent in 2005 compared to 20 percent in 2004.

Fewer than 200 more houses were sold in 2005 than in 2004, an indication of declining demand. Another sign: Thirty-one municipalities had median increases of more than 20 percent in 2005, compared with 44 in 2004.

Although sales comparisons for the first quarters of 2006 and 2005 from the New Jersey Division of Taxation were incomplete, indications are that the market appears to be slowing further this year.

Sales in Cape May and Ocean Counties in the first quarter of 2006 were lower by a couple hundred sales each than in the first quarter of 2005. Atlantic County sales were a bit higher.

Market observers said Atlantic County, which for the last several years has been evolving into a bedroom community for Atlantic City, also is fast becoming a suburb of Philadelphia.

Major developers such as D.R. Horton, K. Hovnanian, and Ryan Homes have been building single-family developments and active-adult communities -- not necessarily with ocean views.

"We call them 'off-shore vs. on-shore,' " said Jerome DiPentino, broker at Premier Properties Real Estate in Longport. "More and more people are choosing to live here year-round, and that is stabilizing the market, although high-end sales in Margate and Longport also have been skewing the median upward."

Things don't seem as rosy in Ocean City, the scene of numerous teardowns and massive development since the mid-1990s. As of mid-June, there were more than 1,700 listings on the Ocean City Multiple Listing Service (MLS).

"They're saying that Ocean City is overbuilt by two years," DiPentino said. "That may be conservative."

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.

What's going on?

"The short-term investors at the Shore were in the condo market primarily, and they're the ones pulling out," said Mark Zandi, chief economist at Moody's Economy.com in West Chester. "They don't buy multimillion-dollar homes."

(In Ocean City, condos made up a little more than half the 1,314 sales in 2005, The Inquirer analysis showed. The median condo price: $529,950, up 14 percent from 2004.)

Oversupply also seems to be a problem elsewhere in Cape May County.

Paul Schlimme, vice president of MLS Realty in Cherry Hill, said that between Jan. 1 and May 31 there were 189 listings on the Avalon MLS, with about nine houses selling per month.

"That means there is a 21-month supply in Avalon, and it is getting worse," Schlimme said. By mid-June, 29 new single-family houses were listed, and just 13 sold, "which means there are 16 more properties competing..."

Over the course of the 1998-2005 Shore boom, Wildwood, West Wildwood, and North Wildwood registered a more than 250 percent increase in median prices, The Inquirer analysis showed. (So did Stone Harbor, Longport, Avalon and Harvey Cedars.)

The Wildwoods, too, were a draw for investors, who razed motels and filled empty tracts with condos. But with for-sale signs sprouting and interest apparently tailing off, that boom could be over, local market experts say.

With summer here, the Shore market could get even slower.

In Ocean City, Lamont said, "open houses are held each weekend, sometimes as many as eight per block on Asbury Avenue, with almost no legitimate buyer traffic showing up even to use the bathrooms."

How This Analysis Was Conducted

The Inquirer's home-price analysis was based on nearly 250,000 residential sales in 2004 and 2005. Home-sale information was obtained from the five Pennsylvania counties and the New Jersey Division of Taxation.

Only sales at fair-market prices of $10,000 or greater were included in the analysis of single-family homes, condominiums, townhouses, and twins, or duplexes.

The median home price is the amount at which half the sale prices are more and half are less. The percentage change reflects the difference in the median price from 2004 to 2005.

A town with fewer than 10 sales is marked "N.C." because the median and percentage change were not calculated. Towns with no sales are marked "N.S."

All numbers are rounded to the closest whole number.

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

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O.C. lifeguards to extend hours on three beaches

OCEAN CITY CAMPAIGNS
Curb the cost
Press of Atlantic City
Published: Wednesday, June 21, 2006
Updated: Wednesday, June 21, 2006

Ocean City has a refreshing and exciting idea — to be the first town in the state to adopt its own public-finance law for local political campaigns.

The town is ripe for such a law. Mayoral elections in Ocean City have become increasingly expensive, reaching a record $250,000 in spending this spring. There is momentum in the city for public financing, which is aimed at lowering the cost of elections and cutting the ties between politicians and wealthy special interests.

Under the plan, the city would set up a public-financing fund; candidates who qualify by collecting enough signatures and enough small contributions of $5 could opt for public financing. They would then be restricted as to how much they could spend and would not be able to raise any additional money.

It's a worthy, welcome concept that's being tried as well on the state level.

The only problem is that city Solicitor Gerald Corcoran says it's illegal on a municipal level. State law does not allow municipalities to dedicate money in their budgets for that purpose, he said.

Well, lawyers can and do disagree. Two lawyers at an Ocean City Council meeting last week — a local attorney and an out-of-state lawyer who helped draw up the ordinance — maintained that such a law is, indeed, legal.

The ordinance failed by a 3-3 vote during a sometimes-testy meeting.

Corcoran's opinion may be right. But the city could find out. Surely it would not cost much, if anything, to seek an opinion from the courts or from the state attorney general's office.

Even better, state lawmakers should simply change the law now to specifically allow towns to dedicate funds to public financing of local elections, clearing up any ambiguity on the issue. Assemblyman Jeff Van Drew, D-Cape May, Cumberland, is hardly shy about introducing legislation to solve problems in his district. We're sure he or another lawmaker could put this bill together pretty easily.

Public financing is a great idea — but it's important the city do it correctly, so it isn't open to a court challenge. State lawmakers should support the idea of offering this option to towns. After all, they're already trying it themselves.

Beach access in N.J. is extensive, but obstacles remain
Posted by the Asbury Park Press on 06/9/06
BY LEANN FOSTER

With another summer upon us, residents across the Garden State are preparing for the annual pilgrimage to the Jersey Shore. But before you settle into that beach chair, you ought to reflect on how lucky you are to access the beach.

In New Jersey, you don't have to be a member of a private beach club or a full-time resident of a quaint Shore town to be able to get to the beach in the summer, to park, to walk through dunes or cross a boardwalk in order to get to this year's favorite spot for fishing, surfing or just plain relaxing.

No, the public has a protected right to enjoy the best the summer has to offer. You'll pay a badge fee, and sometimes you might have to walk a little farther than you'd like in order to get to the restroom or to find those cheese fries. But in general, New Jersey's beaches are available to you for your use and enjoyment.

It's been a year since the New Jersey Supreme Court's decision in the Atlantis Beach Club case, where the Public Trust Doctrine was employed to order public access to a private beach from which the public was being forcibly excluded. The decision also recognizes that beach access consists not just of access points — places along the shoreline where you and your family can get to and from the beach — but something of a package of opportunities that includes meaningful use and enjoyment of the water, the wet sand and a reasonable amount of the dry sand area.

Similarly reinforced is the necessary relationship between your badge fee and the costs of maintaining the beach for public access and use. You'll still think the price increase for this year's badge is outrageous, but it must by law be justified by the municipality and related back to the cost of lifeguards, trash pickup, beach security, badge checkers and other people whose job it is to make your summer at the Shore pleasant and safe.

Of course, public access in New Jersey isn't perfect.

There remain beaches from Monmouth County to Cape May that are not as public-friendly as they should be. Here, private clubs or private residences dominate waterfront property, and "Keep Out" signs signal the message that the public is not at all welcome. In these communities, the public must search, sometimes to no avail, for select and often overcrowded spots where a family can settle in for a day.

With New Jersey's rapidly privatizing shoreline, this exclusivity is not only a current problem, from a legal and a sheer convenience perspective, but something that, unless the public is vigilant, is likely to get worse. Many of these exclusive communities are located on beaches that have been built up with public taxpayer dollars to secure the homes of the very residents whose "No Trespassing" signs make a simple trip to the beach a challenge for out-of-towners and inland residents alike.

Limitations on parking and the availability of restroom and concession services also continue to make life difficult for the public in some beach towns. And let's not forget the "redeveloping" towns where many longtime residents are finding themselves denied physical and even visual access to beaches they grew up on.

Also problematic are our bayside beaches and waterfront areas, where access is very limited, signage to indicate public access areas is scarce and public marinas are every year becoming fewer and farther between as they give way to private, once again exclusive, condominium developments.

Despite these shortcomings, the future is bright in New Jersey for public access and the public trust. This year, we find the New Jersey Department of Environmental Protection refusing beach nourishment dollars for towns that deny adequate public access, holding to a standard that's not only fair but consistent with the DEP's historic practices and the guidelines of the U.S. Army Corps of Engineers for the nourishment program.

With news of shorefront communities from northern Ocean County to Long Beach Island losing beaches to erosion, and related stories raising concerns about the safety of people and property during this year's hurricane season, the DEP's efforts to prioritize access sets an important precedent for the implementation of a program that will no doubt play a significant role in New Jersey's coastal future.

The DEP is also working to improve outreach tools so the public can more readily know where access points are located and where support facilities like restrooms and parking are available. They may not be able to guarantee you water temperature in the 70s, but the state is working to secure our public trust legacy. Coastal grass-roots groups are also doing their part to pry open the doors to the public in communities where access, parking and other necessary support services are difficult, uncomfortable or impossible to come by.

So whether you choose Belmar, Lavallette, Island Beach State Park, Surf City or Wildwood, get out there and enjoy. Make it a point this summer to make the most of your right to access the beaches and waterfront areas across New Jersey.

Leann Foster is policy director of the American Littoral Society, a coastal conservation organization headquartered on Sandy Hook.

Beach property owners should pay a bigger share for insurance
The News Journal - Wilmington,DE,USA
Published June 7, 2006

Payouts in the aftermath of Hurricane Katrina were overwhelming. The only thing that will save the program is congressional authorization to impose large premium increases, bigger deductibles and other limitations. Unless, of course, Congress can be talked into pushing the country further into debt to save some exclusive beachfront property.

Congress should take a hint from private insurers. The price of insurance is going up near Delaware's beaches -- as it is up and down the Atlantic and Gulf coasts.

For private insurers, last year's hurricane damage was a costly lesson. Premiums to protect coastal homes from hurricane-force winds are rising, as are deductibles. In many cases, insurers are canceling policies. They don't want to subsidize risk.

However, some people want the federal government to help pay for a relative handful to live near the beach.

But that is getting too expensive. According to a Brookings Institution report, seven of the 12 most costly natural disasters in American history happened in the last two hurricane seasons.

Global warming or not, the region is in another decades-long cycle of powerful hurricanes. Unlike the last such cycle more than 25 years ago, the beaches along the Atlantic and Gulf of Mexico are thoroughly built up. A hurricane that might have just kicked up sand decades ago now means widespread death and destruction.

The only sensible thing for Congress to do is to raise those rates.

Congress is also considering limiting subsidized flood insurance to owner-occupied housing in the affected areas. Vacation homes and rental properties would not be subsidized.

Congress should recognize reality and increase the payments.