It's Cheaper to Rent
OCEAN CITY — Fewer people may be buying a piece of the shore, but more are renting part of it.
Real estate businesses are reporting a surge in rentals even as home sales decline along the coast. An increase in rentals as high as 40 percent has been recorded by some real estate companies. Most are seeing a jump in the 10 to 15 percent range.
Full article...
Real estate businesses are reporting a surge in rentals even as home sales decline along the coast. An increase in rentals as high as 40 percent has been recorded by some real estate companies. Most are seeing a jump in the 10 to 15 percent range.
Full article...
posted by Little_Silvered at 9:11 PM
33 Comments:
The strength of this rental market is also a precurser to the bottom having been reached in Real Estate. Renting is the first step to purchasing..With rents being pushed up by demand housing prices are sure to follow
I've recently sold my house on the mainland and now renting year-round in Ocean City (great schools) while we look for a home to buy. I've been watching the sales market for over a year waiting for the bottom of this cycle. The market seems to be at a stalemate. nothing is selling. Sellers have reduced by 15-20% and are holding. Not many buyers are biting. Some buyers are waiting for undercapitalized builders to hand keys back to the bank, but I've only seen one "bank owned" sign to date. My landlord wants me to stay two years, which I may just do... I'm living in a $750K house for $1,450/month!
Sally: Go back to sleep, the grownups want to discuss things here.
No business cycle has eight up years, followed by one and a half years down. To believe this is delusional.
And I'll believe the stronger rental market when I see it. I was told last year was a strong year for rentals, and I had my pick of the lot for Labor Day weekend in early July.
There's a ton of supply in the rental market. You can get a great place for almost any week (except August week 1) up until Memorial Day. But prices still need to come down a bit for sales to pick up.
I think that the great weather has also driven more people down to get their rentals. The rental market will be better, but it still can't support the new construction prices right now.
with everyone here waiting for the bubble to pop..I just say don't blink,...we just 2008 prices in 2006 invetory will work itself off (in new homes ) existing homeowners will wait this out and live comfortable .the next leg up will happen in 08'...07 will be slow I have been proven right so far
re: anon 9:57:53 AM- right on. What some people do not seem to grasp is that this "downturn" in the RE market is only in the beginning stages. It is not simply going to play itself out in a matter of a few months. You will see PLENTY of available rentals at the shore in 2007, as "flipper wannabees" who were left holding the bag look for any way to support their investments in lieu of the big flip that never happened. Which is a good thing IMO, as the Jersey shore once again becomes a viable vacation option for those who cannot afford to drop a bundle on overvalued properties. Everyone wins with the exception of the Mcmansion set, they need a dose of cold reality anyway.
I think Sally may be a realtor type, which is part of the housing problem. The NAR would love to sell you a home at 6% commission which potentially could net a profit of anywhere between $18,000 and $30,000 or higher, split between her and the buyer's agent. And the big rub is, despite what they say, the buyer ultimately pays his own and the sellers costs. The bigger rub is the aksing prices they are encouraging their sellers to ask. How can this pattern be sustained indefinitely?
Listen, this cycle, as ANON 2:41 indicates, is just in the beginning stages. Having been through all the down turns since the early 60's and seeing the effect each time on our towns, I believe it hasn't even begun to be felt. We are completely deluding ourselves if we want to believe the hopeful Sally Growlers out there who say the market will be turning soon. The only place it will be turning is south for a long while unfortunately (at least the next 12 months and maybe more according to experts, but nobody really knows for sure). Only when these greedy or upside down sellers have totally capitulated and the market has dropped a huge, unthinkable percentage will there be any new life in this carcass. Remember the early 90's? Housing did not come back for at least 5 years and it was a slow and very painful climb back. The shore was a ghost town. I told my Dad to sell in '89 but he wouldn't listen. He got caught up in the greed like everybody else. He paid the price for greed. Yes, it was very fearful, not just a little bit of pain then back to making huge profits on the house again!
Get real. I am talking real pain and fear of losing everything because of stupid decisions that were made on many people's parts. As usual, it's buyer beware. If the economy slips into a deep recession due to one reason or another I don't even want to think about the fear, pain and panic that will ensue.
Think back to all the people that you and I know to have left the state in just the last 2 years due to being driven out by higher taxes and housing costs, among other things? I can name 12 families that moved to adjacent states or to the west coast. These are the kinds of people that our economy needs to get back and some do want to come back but can't. I am asking, maybe Sally will find a sucker. Who knows?
Renting is the first step to purchasing..With rents being pushed up by demand housing prices are sure to follow
Renting is the opposite of owning. If you don't own a place, you have to rent or slum with a friend or relative. Strong rentals mean the ownership market is weak. Sally, take your crapola somewhere else.
I'm seeing rents in the area that clearly do not cover mortgage expenses, let alone taxes and insurance. There are a number of houses listed for sale at over $750k but also listed for rent at under $3000 per month.
Sure, because they are hanging on any way they can. Do you blame them? I would too if I had a house / investment that I wanted to ultimately sell for a huge profit at some point down the pike. I just question how deep their pockets go before they need to make a decision to let go? That goes back to the poster above who says the pain hasn't even started yet.
re: Sally "... just don't blink" Sally, show me anything in the OC market that indicates this market has bottomed. Houses I've looked at 18 months ago for 1.8M are still available with a new price of 1.3M and still no takers. Bayfronts that were 3.2M are now 2.7M with one owner taking 2.375M for a 3M listing. Last springs new inventory is mostly still available with more than half the inventory from the spring before that still on the market. The only thing I see is less spec houses coming out of the ground this winter. But as I follow the historical low amount of property transfers month to month in the paper, it is going to take a long time to absorb all that inventory. Realtor's websites are full of "under contract" next to listings that have settled over a year ago just to give the impression that inventory is moving. Are these all signs of the bottom?
this dosn't look like pain to mehttp://www.realtor.org/Research.nsf/files/EHSreport.pdf/$FILE/EHSreport.pdf ?.. an adjustment perhaps look at the North east #'S ....When you mention a listing price it is meaningless of course everyone tries to get the best price .Have you ever sold a stock ? you offer it at a price you would like to get ...if you must you then lower that price .same with housing
My theory is that most buyers are not willing to pay more for a shore vacation property than the value of their main residence back home. I live in very nice house in Northern Virginia worth about 700K, and I would really love to buy a summer place in OCNJ, but a 1600-square foot duplex for 800K or even 700K seems artificially high. I could be completely wrong, but I think the market will remain flat until prices fall back to what they were about five years ago, say in the 500K and 600K range.
Thursday January 25, 10:40 AM EST
WASHINGTON (AP) — Sales of existing homes fell in December, closing out a year in which demand for homes slumped by the largest amount in 17 years.
Hey Sally, does this look like there's any pain out there?
why not print the rest of the article .....Even with the sharp drop in sales last year, the median price of an existing home sold in 2006 managed to rise a slight 1.1 percent. But that was far below the double-digit gains during the boom years. The median home price had risen by 12.4 percent in 2005.
After a five-year boom, housing slowed significantly last year, which has caused ripple effects throughout the economy with rising job layoffs in construction and other housing-related industries.
But economists said they believe the low point for housing has been reached and they are forecasting a slow rebound in 2007. Because of that optimism, analysts don't believe the slump in housing will drag the overall economy into a recession.
OC Buff, that may make logical sense, but it wasn't true 2-5 years ago. People were willing to buy prop's in OCNJ at double and triple the value of their primary homes because prices were soaring. Now that things have slowed to a crawl, I agree that prices will have to remain flat for many years until the fundamentals catch up or prices will have to drop to get back to more normal valuations. Until then, Sally is the only sucker left on the block.
You can print the whole damn article if you like. If you want to rely on what economists are predicting for the future against FACTS from the past year, then go ahead. There's always a need for a greater fool in the RE market.
Anonymous, is it fair to presume that the run-up we saw in the past five years was largely driven by artificially low interest rates (when the Fed lowered rates down to 1 percent and held them there too long)? That is why I conclude that the appreciation during the same period may also be artifical. If my theory is right, the big question is how much more prices will drop, even in charming Ocean City, perhaps the shore resort with the highest demand. I think we could see prices drop again this year by the same rate as they did in 2006.
I'm not the one who printed the article first ...I just picked up on it...But I did notice that the median price of an existing home sold in 2006 managed to rise a slight 1.1 percent. this is far from a bubble bursting that you have been screaming about for years.when you realize that housing is a commodity as well as a place to live you will understand why homes hold there value ...until then well
Anonymous, one last thought: I'm interested in buying for my family's enjoyment for many years to come, not for investment or rental purposes. The Fed's low interest rates essentially distorted the normal OCNJ market by encouraging speculators and investors (not so much traditional second home buyers like me) thus inflating demand and prices. Does this sound plausible?
OC Buff, I completely agree with you. I was one of the speculators from 2002-2005. The only reason I was able to afford those prices was due to the ridiculously low interest rates. I had a 3-yr ARM for 3 3/4%. At that rate I qualified to borrow over $500k. Without that cheap money, I couldn't even get close to buying down there. My latest inquiry from a bank has ARMs at the same rate as the 30-yr fixed (6%). At that rate, I can't afford to buy back the same property I previously owned. I see a direct correlation between interest rates and housing prices, but others may have different explanations for the bubble. I think it's a great idea to buy and own for the long-term. I haven't been active in the market in the past year or so, but I would think some sellers may be more willing to negotiate now. It's hard to say when the bottom will be reached, but if you hold for the long term, I'd say it's safe to assume that prices will be higher 20 years from now.
Sally, this a Jersey Shore bubble blog. Median prices of NJ shore properties did not rise 1.1% in 2006. Demand is way down at the shore. Sellers are not dropping prices and few properties are being sold. Right now there are 4 properties listed with values over $500k up for Sheriff's sale on the Cape May county website for Ocean City, NJ. Prices are not going up 1.1% at the shore.
Anonymous, where on the Cape May County website can you find the four Ocean City properties up for sherriff's sale?
http://sheriff.co.cape-may.nj.us/
Off to the left, click onthe link for 'Sheriff's Sales'. Then at the top of the next page, click 'go to listings'. Each town is separately listed.
"Prices are not going up 1.1% at the shore. " could you post a link to prove that ? posting without providing a link or proof of quote is amateurish
"Foreclosures jumped 35% in December versus a year earlier, RealtyTrac said Wednesday. For the fifth straight month, more than 100,000 properties entered foreclosure because the owner fell behind on loan payments, the firm noted."
Sally sez everything is good and getting better!
http://www.otteau.com/
The_Otteau_Report/2006.Q3.
CapeMayCounty.pdf
Sally, how is this for real data? It is an excerpt from The Otteau Report on 3Q06 - the most recent available. My guess is that 4Q06 was not much better, nor will 2007. Here is a snapshot for Cape May county:
2005 2006
Avg month offerings 578 643
Avg month sales 302 179
demand/supply ratio 52 28
Inventory 2666 4089
Most other counties are similar.
Now, you've said some pretty stupid things on this thread and called me an amateur. Why don't you just remove your bookmark and go back to Martha Stewart's or Rosie's blog or wherever other similar minds of your like go?
The strength of this rental market is also a precurser to the bottom having been reached in Real Estate.
Ummmmm....if this rental market had "strength", it wouldn't be cheaper to rent.
Just saying'
I do have this bookmarked with my MS site ,both sites make statements that are all fluff and no substance .Martha has her 'It's a good thing" and here I have chicken little the 'sky is falling " ...for over 2 years now .I must say it is getting a little old and worn...
yeah, don't let facts get in the way of your opinion.
Sally O'Realtor - on what do you base your comment that rents are being pushed up? And what's your timetable on rising rents being translated into higher housing prices?
Realtors are hilarious. They'll tell you that a house in flames is an "energy-saver". The best time to buy? Right now. The best customer? Anyone. If the market isn't "soaring", it's "on its way up after a minor & expected correction". "Up" cycles will sustain for many years at a time, but "slumps" only last a few weeks before "correcting" themselves. The shore is "different" and thus not subject to "corrections".
Enjoy their hilarity while you can because soon there will be a lot fewer of them around to amuse us all with their insight.
Pressure is mounting on rates. In just the past week alone, brick and mortar institutional rates have, on average, gone up more than a 1/4 point on a 30yr fixed. (6.1% to 6.36%) Will this lead to a little panic buying or a dead cat bounce?
Probably.
I believe 30 yr rates will go over 7% this year and stay there for at least the next 3-5 yrs. Bernanke, I sense, would like to keep the fed rate at 5.25% for a prolonged period of time to show and maintain stability but a continued weakening dollar, along with other inflationary influences, will challenge this objective.
Remember when banks use to offer the same interest rate year after year (about 5.25%) on their standard savings accounts? Looks like we`re headed back to those days or something very similar.
Obviously, if this scenario plays out, it will not bode well for the RE industry.
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