Properties on or near the ocean typically hold their value better in a downturn because their supply is limited.
But this time, even some island properties are distressed, and some home prices are a fraction of what they were before the real estate bubble burst.
RealtyTrac, the Irvine, Calif.-based provider of foreclosure information online, this summer issued a list of the 10 best beach towns for buying foreclosure bargains.
The company started by rounding up the top U.S. beach towns and then ranked them according to how much prices were discounted for distressed properties from pre-foreclosure to bank-owned.
Atlantic City placed seventh, with an average sales price discount of 31 percent in the first quarter.
|Atlantic City, New Jersey (Photo credit: Dougtone)|
Carol Moscony, an agent with Number One Realty in Atlantic City who handles quite a few distressed properties, said the fall in prices has been dramatic, even for ocean-front condo units.
“Six years ago, a gentleman bought a property in the Ocean Club. He spent more than $600,000 and has it for sale now at $359,000,” said Moscony, 66, of Brigantine. “People are going through this two-bedroom home and not even putting in an offer.”
In the Island Club condos, across the street from the Ocean Club, studio units with an ocean view that can sleep four were selling six years ago for $175,000, she said.
“Today, I have some in the building for $65,000,” Moscony said, adding that the monthly condo fee is $225 and includes all utilities, free parking and bicycle storage.
She said she’s also working on a short sale of two units at the Seabreeze Condominium. The owner paid $90,000 and $85,000 for the units and is now getting offers less than $40,000.
The market’s softness extends to rentals too, she said, estimating that 65 percent of available properties have been rented this summer. And renters want a bargain as well.
“If a unit rents for $16,000 for the summer, they want it for $12,000,” she said.
Some year-round rents also have fallen, and three-bedroom properties that rented for $1,250 to $1,450 a month four years ago are now about $950, she said.
Buyers are taking advantage of the opportunities for vacation homes.
In Ocean City, home sales increased 14 percent to 735 units last year and 25 percent in the first quarter of this year to 185 homes, according to an analysis of Multiple Listing Service data by Maria Marinelli, president of the Ocean City Board of Realtors.
Marinelli, a broker/associate with Re/Max At The Shore, also found sales increases last year of 5 percent in Atlantic City (to 242 sales) and Brigantine (256), and 22 percent in Longport (44 sales).
The National Association of Realtors 2012 Investment and Vacation Home Buyers Survey found that U.S. vacation-home sales rose 7 percent last year to 502,000.
The survey found that 39 percent of vacation home purchases were distress sales, meaning the properties were selling for less than the mortgage owed on them or were in some part of the foreclosure process.
The median price of vacation homes sold last year was $121,300, down 19 percent from $150,000 in 2010.
The Realtor survey also produced a portrait of a typical vacation-home buyer as someone 50 years old with a median household income of $88,600, purchasing a property a median distance of 305 miles from their primary home.
A little more than a third of vacation-property sales were within 100 miles of the buyer’s residence, and a similar share were more than 500 miles away.
While buyers like the bargains produced by the severe downturn in real estate and the resulting pressure on prices, real estate professionals are ready for the improving market to get back to a more normal balance.
“I’m only hopeful. I’ve lived through real estate slumps two or three times, but it has never been this bad,” Moscony said. “This will turn around also.”
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©2012 The Press of Atlantic City (Pleasantville, N.J.)
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Taken from: http://www.loansafe.org/real-estate-slump-makes-beachfront-homes-more-affordable