High Vacancy Rate at Shore Could be Interesting Signal
This article points out that there are a lot of summer houses in LBI that are still available for rent. In my opinion, this is an interesting development and is a telling signal that the supply/demand dynamics are not balanced at the Shore. The only way that the excess rental supply can be absorbed is by reducing the rental prices. The high rental asking prices are obviously necessitated by the exorbitant prices paid to purchase the property in the first place. Eventually, some of the over-levered owners of LBI properties are going to have to sell their properties because the rental income is below the carrying cost of the property.
Notice that the article says that this is the “third year in a row” that the rental market has been trending downward. Probably not coincidently, we seem to be in about the third year of the housing bubble.
[“Filling rentals on LBI no breeze this summer
By NICOLETTE KOTSIANAS For The Press, (609) 978-2013
The signs are still everywhere.
Take a drive along Long Beach Island's main thoroughfare and look down the residential streets of the bustling shore community. Rental signs are planted in lawns advertising that, even in the second week of July, there are still vacancies.
With the July Fourth sparklers now fizzled out, real estate agents say that some homeowners on the island have scrambled to drop prices for a week's stay in their home. Those scouring the Web for a summer rental will find dozens of new, more affordable properties popping up this week, listings that were not there just two weeks ago.”]
go...
And a reader ads,
This isn't just a Jersey Shore story.
The same is true for vacation properties in the Carolinas. Think about it (I don't remember where I picked this up). You have more and more people buying second homes. Maybe before those people came to the area and rented.
They're now not only out of the market, but expanding it by looking to rent their own second home for a stretch. The simple economics of expanding supply and increasing demand with an element of compounding.
Notice that the article says that this is the “third year in a row” that the rental market has been trending downward. Probably not coincidently, we seem to be in about the third year of the housing bubble.
[“Filling rentals on LBI no breeze this summer
By NICOLETTE KOTSIANAS For The Press, (609) 978-2013
The signs are still everywhere.
Take a drive along Long Beach Island's main thoroughfare and look down the residential streets of the bustling shore community. Rental signs are planted in lawns advertising that, even in the second week of July, there are still vacancies.
With the July Fourth sparklers now fizzled out, real estate agents say that some homeowners on the island have scrambled to drop prices for a week's stay in their home. Those scouring the Web for a summer rental will find dozens of new, more affordable properties popping up this week, listings that were not there just two weeks ago.”]
go...
And a reader ads,
This isn't just a Jersey Shore story.
The same is true for vacation properties in the Carolinas. Think about it (I don't remember where I picked this up). You have more and more people buying second homes. Maybe before those people came to the area and rented.
They're now not only out of the market, but expanding it by looking to rent their own second home for a stretch. The simple economics of expanding supply and increasing demand with an element of compounding.
posted by Little_Silvered at 11:04 PM
2 Comments:
This isn't just a Jersey Shore story.
The same is true for vacation properties in the Carolinas. Think about it (I don't remember where I picked this up). You have more and more people buying second homes. Maybe before those people came to the area and rented.
They're now not only out of the market, but expanding it by looking to rent their own second home for a stretch. The simple economics of expanding supply and increasing demand with an element of compounding.
Thanks for your blog btw.
I wonder how many seasons people will be willing to hold onto a negative cash flow rental property. There could be some bargains coming to market over the next few years.
Post a Comment
<< Home