2007 Market summary

Sub-prime loans, housing bubble, mortgage crisis?!? I can’t turn on the TV or read the newspaper without seeing all of the media hype. So, what’s the deal? Is it really that bad? Well, in some areas of the US, yes it may be. However Sea Isle City is not the same as the overall US Real Estate Economy. In fact, it’s not even the same as our neighboring shore communities. So forget the media hype, let’s look at how Sea Isle has performed over the past 3 years in the changing market and how our values stand today.

Total # of units sold -- 2005 -- 2006 -- 2007 --- Total Square Miles
Sea Isle City ---------258 --- 162 ---- 230 ---- 2.2 sq. miles
Ocean City ------------- 1230 -- 668 ---- 672 ---- 6.92 sq. miles
Avalon ------------------ 292 --- 158 ----- 169 ----- 5.59 sq. miles

#of units sold per square mile:

*Based on CMC MLS and SJRSMLS statistics

The total number of units sold indicates a great recovery since the height of the market in 2005 and a little more overall consistency in Sea Isle. In fact, there were only 28 more units sold in 2005 then 2007. What does that mean as an owner? Most importantly, it means that your property is still liquid in Sea Isle. If you want to sell your property, you can.

Let’s look at condo values over the past three years:

Average Condo Sale Price --- 2005 -------- 2006 --------- 2007
Sea Isle City -------------- $804,380 -- $692,138 -- $743,595
Ocean City ---------------- $767,611 -- $571,865 -- $556,700


*Based on CMC MLS and SJRSMLS statistics

The average condo sale price also indicates a recovery and overall consistency. In 2006 the average condo sale price dropped 14% from 2005. Why? Because of the media hype. In 2006, all of my buyers were looking for foreclosures and distress sales. As a result, fewer properties sold forcing owners to adjust their prices and negotiate more.

2007 was a great recovery year in Sea Isle. By the end of this year, the average condo sale price will only be down 7.5% from the peak in 2005. Why? Because the distress sales and foreclosures didn’t happen. The families who bought property in Sea Isle over the past 5-10 years were not sub-prime, risky borrowers. They were strong borrowers with good credit, good income and an understanding of what they could afford. At the same time, the demand remained high. Who wouldn’t want a vacation house in Sea Isle City? After all, Sea Isle is where the best family memories are made in the world! The results were more houses began to sell, inventory began to fall and the average condo sale price began to recover.

Compare the average condo sale price in Sea Isle vs. Ocean City. In 2006 the average condo sale price in OC dropped 25.5%, then another 2% in 2007. That’s 27.5% lower today then the peak of the market. Why? Not because there were risky borrowers in Ocean City, but because of the quality of the product. Simply put, side-by-side townhouses in Sea Isle are far superior to the top and bottom style duplexes common in Ocean City. In addition, Ocean City is much larger than Sea Isle but has smaller building lots than Sea Isle. This results in a much higher inventory. Sea Isle’s small size not only keeps the inventory low, but also allows for every property on the island to be within walking distance to the beach. There’s not a bad location on the island! All of these factors create a higher demand in Sea Isle and result in a greater recovery and overall consistency.

*It should be noted that these statistics are based on condo/townhouses because that is the majority of Sea Isle’s inventory.

Another stabilizing factor in Sea Isle’s market is the rental demand. Compared to many other islands, Sea Isle has the highest demand for family rentals per unit. This has played a big role in supporting our property values because owners and developers can depend on rental income to offset some of the costs.

What does the future hold? As I often say, no one has a crystal ball. However, the combination of these factors should result in stable property values. I don’t think that we will see the extreme appreciation rates that we did from 2000-2005 in the near future, but Sea Isle Real Estate should go back to being a conservative investment.

Market stability, high-quality townhouses, a great family atmosphere and a short walk to the beach makes Sea Isle the best investment at the shore.

Snow on the beach video #2

This video was taken just after sunrise. Turn your volume up!

Snow on the beach video

This video was taken just before the sun came up. Turn your volume up!

Sea Isle Zoning Changes

Zoning change would increase residential units atop businesses

Published: Friday, December 7, 2007

SEA ISLE CITY - City Council is considering changing zoning rules to allow more residences above stores, an effort mirrored in other shore communities to entice businesses to stay in business.
Sea Isle City's proposed ordinance would allow businesses in commercial districts to rebuild their properties with one residential unit per 1,250 feet of lot area on the property.

This could allow four to five residences above a business. Currently, only one is allowed.

City officials said they're considering the changes in an attempt to keep business districts intact and keep business owners away from developing their properties as residential only.

Apart from offering the incentive of extra houses, the proposed ordinance would prohibit new single and double family dwellings in business districts.

"We've been losing our business community," City Councilman Michael McHale said. "We sat down with our business community about what can we do … We sat down and came up with a consensus on what is best for the town."

"The first floor (should) stay commercial, that's the most important," he said.

Although the proposal, which faces a public hearing later this month, has strong support, not everybody is convinced the added density is what the city needs.

Councilman William Kehner said he questioned the density that would apply to business districts that are outside the downtown district in the heart of the city.

A 5,000 square-foot lot can have four residential units above the store.
"I myself feel that's a little too dense for the whole business community," he said.

"I'm not going to fight it at this time, because we need to give some kind of shot in the arm to the businesses to assist them. I'm hoping that it's in the right area and doesn't get out of hand in the other areas," he said.

Kehner said he would wait for the public hearing and for feedback from the city's Planning Board before making up his mind.

Sea Isle City's proposed ordinance also changes the fees for a capital-improvement fund for parking.
Properties that do not meet parking requirements but receive a variance must pay $20,000 per parking space to a city fund to purchase alternate parking. This payment is currently $1,500.

Stone Harbor and Ocean City are pursuing somewhat similar approaches to residential units above storefronts. In November, Ocean City passed an ordinance that allows as many as two duplex condominiums above shops and restaurants downtown on 30-foot lots.

Stone Harbor introduced a controversial ordinance last month that would create a waterfront district allowing two residential units above a business in the district. That ordinance also faces a public hearing this month.

Dustin Laricks, vice president of Laricks Real Estate on Landis Avenue in downtown Sea Isle City, said he feels the zoning changes will promote the rehabilitation of Sea Isle City business districts.

"It's going to improve the downtown area, all the business districts in my opinion, because the commercial storefronts can't generate enough income to support the value of the land or to support the cost of new construction if you want to update," he said. "The bulk of the money is in residential."

Beaches to benefit from veto override

Published: Thursday, November 15, 2007
SEA ISLE CITY - The city is still in line to get its first major beach-replenishment project, but only because the U.S. Senate and the House of Representatives voted to override a presidential veto of the authorization bill.

Mayor Len Desiderio was on an airplane on his way to Florida last week when he heard about the 361-54 House vote overriding President Bush's veto of the Water Resources and Development Act, or WRDA. Two days later, the Senate also voted to override the veto.
That means the $136 million needed to refurbish beaches in Sea Isle City and Strathmere has been authorized, although an appropriations bill still must be passed. Desiderio expects this to happen in 2008 or 2009. He said it can't come soon enough.

"It's extremely important to Sea Isle City to get this. We're counting on the money to help our beaches. Erosion is bad, from the north end to the south end," said Desiderio, speaking from Naples, Fla., on Wednesday.

Desiderio has seen Avalon, Ocean City, Cape May, Cape May Point and other towns get sand from U.S. Army Corps of Engineers Beach projects. The key is to get such a project authorized under a WRDA bill. Once it is authorized, the funding usually follows.
This was the second time U.S. Rep. Frank LoBiondo, R-2nd, has voted to override a presidential veto in the past few months. The first involved children's heath insurance.

"This bill includes several provisions that are critical for South Jersey, especially the residents of Sea Isle City whose property and businesses are threatened daily by beach erosion. It was never a question to me to vote to override the president on this important bill. The serious concerns of my district and my constituents always come first," said LoBiondo.

Bush said the bill "lacks fiscal discipline" and makes American taxpayers support "a pork-barrel system" of authorization and spending when the merit of a project is an afterthought. Bush noted the bill went into conference at $14 billion to $15 billion and ballooned to over $23 billion.

Bush, who has been a critic of beach replenishment, said the bill could hinder other Army Corps priorities such as providing hurricane protection to New Orleans, restoring the Everglades and reducing flood damage in Sacramento.

But the bill does not only restore beaches in southern New Jersey. LoBiondo notes it also includes funding to clear debris from the Delaware River where a discarded anchor caused a major oil spill a couple of years ago. Such spills often threaten the fishing industry and shore tourism. It also includes money to revitalize the Delaware Bay oyster industry.

Several other beach projects are in the WRDA bill, including adding six beaches in Cape May Point to a periodic sand-pumping schedule. An already authorized project pumps sand from Cape May to Central Avenue in Cape May Point. This would extend the pumping past Central Avenue.

The bill also would extend an experimental beach program that has funded artificial concrete reef structures in Cape May Point. It would also provide funds to remove the structures when they fail. This would help Cape May Point remove a reef that was installed incorrectly and sank.

A provision from LoBiondo also keeps the federal government paying for 65 percent of the beach projects, with state and shore towns paying the other 35 percent. There have been attempts to reverse this so the federal government only pays 35 percent.

Lobiondo has also inserted language making it clear that periodic beach replenishment is a "federal priority." Bush, and President Clinton before him, tried to get the government out of the beach business.

Opponents of the projects argue the pumping only protects the second homes of rich people, while shore tourism interests point to the huge impacts beaches have on the economy and a reduction in federal flood insurance claims in towns with restored beaches.

The Real Estate Long View

The Long View
by Lawrence Yun, Vice President, NAR Research

“How much have real estate investors lost due to the housing market bust?”

That was the (highly loaded) question posed to me recently by a producer of one of the major evening news programs. The show wanted to run a story about the "pains" being felt in the market.

Hmm. Well, exactly how much real pain are we talking about? Let's look at a couple of examples. An investor who bought a property in Las Vegas five years ago would be ahead by $150,000; up $200,000 in Miami. The average investor nationwide – up $54,000. Only the recent buyers (flippers) who bought last year in few specific markets would have encountered a loss.

Not All Losses Are Created Equal
I’m not discounting the discomfort of those who lost big, especially lenders and hedge funds who had large exposures to subprime loans. Investors in homebuilder stocks have certainly experienced pains. But nearly all real estate investors who have a reasonable holding period are doing quite fine. Some of these fortunate buyers who got into the market several years ago will still consider a modest give back as a loss without considering the large gains reaped during the housing boom. That’s the nature of the human mind. A gain of $190,000 in Miami feels like a $10,000 loss considering that the gain had been $200,000.

A Home is Not a Stock Certificate -- Thank God!
Foreclosures are rising and construction workers are being laid off. REALTORS® are feeling the pinch as well. The median income of a typical REALTOR® has been falling due to the correction in sales transactions. However, consumers and homeowners who are in it for the long-term are once again coming out well ahead.

Because of the power of leveraging, $10,000 used for a down payment on a typically priced home in the United States at a typical appreciation rate of 5 percent will return $110,000 after 10 years. The same $10,000 invested in the stock market appreciating 10 percent annually will result in $23,600. No wonder the data from the Federal Reserve show consistent results year-after-year of the staggering difference in net worth between homeowners and renters. A typical homeowner had $184,400 in net worth versus only $4,000 for a typical renter.

The Spooky Thing
The lack of buyer confidence to enter the market has been the one principal reason in holding back home sales. Many would-be buyers are spooked of a possible home price decline. And the media is fueling that fear. Some of the most popular market gurus who offer their advice on television and other media say so. Caution is in order, however. As a recent Barron’s article pointed out, stock picks made by one such expert actually underperformed the market.

Opportunities to Seize
It’s also important to point out that times of crisis often turn out to have been times of opportunity in hindsight. With over four million net new job additions in the past two years– the time frame during which home sales have steadily fallen – a significant pent-up demand has developed. Home sales and home prices will be higher in 2008 compared to 2007. And, as with any investment, look longer term. Those investing in a home and keeping it for a typical holding period of six to ten years will likely see their investment pay off; those homes will have been a good investment.

As for stocks, they are not the enemy of real estate. Many REALTORS® own stocks. (So do many economists!) The latest NAR research on vacation-home buyers reveals that many of them rely on stock market wealth to fund that second-home purchase. Stocks and real estate both promote the importance of private ownership.

Where to Throw the Darts
Of course, with housing figures down, all eyes at looking to the stock market. Indeed, the stock market is at an all-time high. That's terrific in and of itself and reflects confidence in the U.S. economic outlook. Just be careful about taking specific advice from any hyper-emotional TV personality. Darts should not be thrown at publicity posters of any "mad money" host. You’ll likely have just as good of luck by reining in your emotions (and money) and throwing them randomly on the financial pages of your newspaper for your next stock pickings.

Renting from Laricks has never been easier!

Laricks Property Management has simplified the reservation process. For our many clients who take advantage of our online rental search and reservation website, we have also provided the option to send leases by email and to accept credit cards for payments. Our goal is to create a fast, simple and stress free way to plan your next summer vacation in Sea Isle City!

Find out how easy it is by clicking on the rental button at the top of our website.

Beach Replenishment Article

Sea Isle City Beach Rebuilding Funds Secured
By Herald Staff
Published August 04, 2007

U.S. Rep. Frank A. LoBiondo (R-2nd), a member of the House Water Resources & Environment Subcommittee, on Aug. 2 announced that several provisions he secured to benefit South Jersey within the 2007 “Water Resources Development Act” have been approved by Congress. WASHINGTON, D.C. – U.S. Rep. Frank A. LoBiondo (R-2nd), a member of the House Water Resources & Environment Subcommittee, on Aug. 2 announced that several provisions he secured to benefit South Jersey within the 2007 “Water Resources Development Act” have been approved by Congress.

Included within the bill is a $136 million authorization for the construction of the Sea Isle City beach replenishment project and explicit approval for the Army Corps of Engineers to remove debris from the Delaware River. The final legislation will now head to the President for his signature.

“I am pleased Congress has approved these projects which are critical to South Jersey. This legislation is especially important for Sea Isle City and its residents, whose property and businesses are threatened daily by beach erosion,” said LoBiondo. “I will continue to fight for South Jersey’s fair share, and to ensure our waterways and coastal communities are protected.”

“We are very thankful to Congressman LoBiondo for his efforts,” said Sea Isle City Mayor Leonard Desiderio. “Throughout my 14 years in office, I have had a great working relationship with the Congressman. He’s always delivered for his district and for Sea Isle City. This is great news for the citizens of Sea Isle City.”

Emerging from the House-Senate Conference Committee, the legislation funds the following projects championed by LoBiondo:

* A $136 million authorization for construction of the Sea Isle City and portions of Strathmere beach replenishment project and periodic renourishment over 50 years (Note: A Congressional authorization is required prior to the appropriation of federal funds for the project – federal funds were not and have not been appropriated for this project at this time);

* Explicit authorization for the Army Corps to remove debris from the Delaware River that would be hazards to navigation. This provision came about as a result of the Athos I oil spill which was caused by a discarded anchor that ripped a hole in the haul of the ship;

* Authorization to incorporate the Cape May Point National Shoreline Erosion Control Demonstration Project at the boroughs six beach cells into the Lower Cape May Meadows Project. This would enable the Army Corps to replenish the beach cells when the Meadows Project receives periodic renourishment;

* Explicit authorization for the Army Corps to conduct the oyster revitalization project in the Delaware Bay. This is continuation of a project already underway in conjunction with Rutgers University;

* A provision originally included in LoBiondo’s “Community Beaches Protection Act” (HR 1504) to reauthorize and expand the National Shoreline Erosion Control Development and Demonstration Program. The provision will extend the program’s life, allow cost sharing with local communities, permit the removal of projects that do not perform and increase the federal funding for the Program to $30 million annually.
Cape May Point is the site of the nation’s first project under the Shoreline Erosion Program where they are testing artificial reefs for erosion control;

* A provision originally included in LoBiondo’s “Community Beaches Protection Act” (HR 1504) which strengthens current federal policy for beach restoration and clarifies that periodic renourishment is a federal priority; and,

* A provision originally included in LoBiondo’s “Community Beaches Protection Act” (HR 1504) to prohibit the Army Corps from forcing states and municipalities from paying more than the Congressional-authorized share.

In 2001, LoBiondo led the effort to defeat an amendment to an annual appropriations bill that would have flipped the current cost-share formula, forcing state and local communities to pay 65 percent of the project costs. The current formula requires states/localities to pay 35 percent of the costs while the federal government covers the remaining 65 percent.

House value prediction according to the National Association of Realtors.

Home prices are expected to recover in 2008 with existing-home sales picking up late this year and new-home sales rising early next year, according to the latest forecast by the National Association of Realtors®.

Lawrence Yun, NAR senior economist, said a good buyers’ market has evolved. “Buyers now have an overwhelming advantage given the wide selection of homes available in many markets,” he said. “But with profit margins coming under pressure, homebuilders will limit new construction well into 2008. This should help the overall inventory level to move steadily into a more balanced state.”

Existing-home sales are expected to total 6.11 million this year and 6.37 million in 2008, down from 6.48 million last year. New-home sales are projected at 865,000 in 2007 and 878,000 next year, compared with 1.05 million in 2006. Housing starts, including multifamily units, are forecast at 1.43 million units this year and 1.44 million in 2008, down from 1.80 million last year.

Existing-home prices are likely to rise 1.8 percent to a median of $222,700 in 2008 after a 1.4 percent decline this year to $218,800. The median new-home price should rise 2.2 percent to $245,400 next year following a 2.6 percent drop in 2007 to $240,100.

“Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008,” Yun said. “Local conditions vary considerably, but with historically low mortgage interest rates this summer and sustained job gains, it could be a good time for first-time buyers with a long-term view to test the housing waters.”

The 30-year fixed-rate mortgage is estimated to average 6.7 percent during the second half of this year, and fluctuate around 6.6 percent in 2008.

Growth in the U.S. gross domestic product (GDP) will probably be 2.0 percent in 2007, compared with a 3.3 percent growth rate last year; GDP is forecast to grow 2.8 percent in 2008.

The unemployment rate is likely to average 4.6 percent in 2007, unchanged from last year. Inflation, as measured by the Consumer Price Index, is projected at 2.6 percent in 2007, down from 3.2 percent last year. Inflation-adjusted disposable personal income should rise 3.0 percent this year, up from a 2.6 percent gain in 2006.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Sea Isle City picks site for new library

Officials picked a site for a $4.5 million library this week, choosing an empty lot on 48th Street instead of the site of an existing library downtown.

To read the entire article, click the link below.
http://www.pressofatlanticcity.com/news/local/capemay/story/7512498p-7410953c.html