This is the time of year when shore real estate agents look hopefully to spring for the weather and market to heat up.
Not this time, not in Ocean City.
Realtors there are defying the winter doldrums and record snows to sell homes now, helped by an apparent turnaround in the market and what could be the start of a rush to grab properties at reduced prices while rates are low.
“I’m very optimistic. I honestly believe we’re out of it and going upwards,” said Nick Marotta, the new president of the Ocean City Board of Realtors.
“It,” of course, is the worst real estate market in a generation, the wreckage of the 2006 bursting of a property bubble inflated by reckless lending and unwise investing.
What convinces Marotta that the market has bottomed out and started improving is an impressive 5 percent increase in Ocean City overall home sales in 2010 — with an 18 percent jump in the final quarter.
“December was just incredible,” he said, and the fourth quarter was the second best of the year — unheard of for a resort property market.
“You’re in the fall, in the winter, and people are coming down to see properties,” he said. “The absolute positive is that we have hit our bottom and are definitely on our way up.”All Posts
Steven Brady, president of Ocean City Home Bank, told the city’s Chamber of Commerce on Thursday that second-home purchases will boost the local real estate market, which may not be as sluggish as the national market in 2011.
Brady said home prices have stabilized in Ocean City and some other areas, while they’re expected to drop an additional 5 percent to 10 percent in other places.
Property sales of all kinds — single and multi-family homes, condos, commercial and land — were 642 for the year in Ocean City, compared to 610 in 2009, Multiple Listing Service figures show.
In the fourth quarter, 176 properties sold, up from 149 the year before.
“We had 77 transactions in the month of December,” said Marotta, broker and salesperson at Academy Real Estate in Ocean City. “That’s very strong.”
Inventory is dropping as well, he said, another positive.
Currently, there are 998 properties for sale in Ocean City. “At the peak, before the market crashed, we were at 1,700 listings,” he said. “The past year we were between 1,100 and 1,200 listings, so the inventory is being eaten up.”
Cash sales coming back
The final indicator he sees falling into place is the return of very affluent buyers. In two recent transactions, buyers paid $2.3 million and $1.7 million in cash for choice properties.
“That’s a real positive, when you start to see people with money coming back,” he said. “That means the smaller fish will feel secure.”
Tempering this upbeat view of the island market is Mike Contino, a sales associate with one of the city’s stronger agencies, Ocean City Realty.
“We did a little better than the previous year. Prices are still soft, they’ve come down a little and the bottom hasn’t dropped out completely, but I worry that we’re still seeing an increase in short sales,” Contino said.
In a short sale, the price of a home is less than what the seller owes on the mortgage for the property, and he said about 9 percent of the agency’s current listings are for short sales.
“People who bought in ’04, ’05, ’06 and even in some cases ’07 thought they got a great buy, but it’s not so great if you have to sell now,” Contino said.
Some, maybe a lot, of those underwater sellers bought hoping the rapid price appreciation of the bubble would continue. Others simply experienced a job loss or some other event that requires them to sell.
“I tell buyers to buy for the right reasons, because you love Ocean City and want to come here with the kids and grandkids. Otherwise, you should just rent,” he said. “If you come back in a couple of years and want to sell, I’m the only one who will make money.”
Those right reasons are some of the things that make the city’s property market unique. Contino noted how condos are a big part of it, with 443 of last year’s 642 units sold.
Rentals still filling up
Rentals are also a huge part of the business, something that Realtors inland can only envy in a prolonged real estate slump.
“No matter how bad the economy or unemployment, people will still find the money to do a one-week rental in Ocean City,” he said. “Maybe the grandparents will kick in, which is very common, and the whole family will spend time together.”
Marotta sees other advantages as well, beyond the beach, Boardwalk, airport, golf course and relatively new community and senior centers.
“Besides being family-oriented, we’re the first exit off the parkway” to a beach resort heading south from the Atlantic City Expressway, he said. That saves Ocean City visitors as much as an hour coming and going over those who continue on to Wildwood and Cape May.
Such persistent appeal doesn’t go away in a downturn, but is suppressed by more urgent and temporary financial concerns … until it’s liberated by the next turn of the market.
“The message is clear for Ocean City: We’ve stabilized, the prices are starting to increase a little bit, with interest rates near an all-time low and with property much more affordable. This is why you’re seeing the run down here,” Marotta said.
Published by the Atlantic City Press: Friday, January 14, 2011 9:20 pm | Updated: 4:51 pm, Sat Feb 12, 2011. Written by KEVIN POST Business Editor | Atlantic City Press
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