Jersey Shore Real Estate

February 13, 2008

Look who’s buying now

By CAROLE MATTESSICH
Correspondent

While the housing boom may have slowed, real estate professionals say that “boomers” looking for second homes still constitute the largest portion of home buyers at the Jersey Shore.
What differs from past years, they say, is the boomers’ motivation for buying.
When construction was at its peak, many boomers donned imaginary developers’ hats and used family trust money to purchase homes that could be “flipped” relatively quickly for a large profit. By contrast, today’s second-home buyers are making decisions based on personal comfort and lifestyle changes, a certain nostalgia for their own past, and an intention to use their second home for more than just a short-term investment.
Meanwhile, in mainland communities, where buyers often are purchasing primary residences rather than second homes, the buyer profile has remained relatively stable.

Boom Groups

According to Jeff Quintin, of Prudential Fox & Roach’s 55th Street office in Ocean City, baby boomer buyers in the second-home market typically fall into one of two groups.
The first group includes adults very near retirement age, whose children are starting their own careers and moving out of the family’s primary residence.
With college expenses and other costly contributions to their children’s upbringing largely at an end, boomers in this group finally have reached a point where they need feel no guilt when they engage in activities – like purchasing and maintaining a second home at the Jersey Shore – that are “all about them,” Quintin said.
The second boomer group is a slightly younger crowd, perhaps in their 40s and early 50s, whose children still may be attending school. Frequently both spouses have demanding jobs, and their lives are filled with meetings, appointments, and sports events. These boomers, too, seek a place that will provide some solace and comfort, both for themselves and their children.
Quintin noted that, while it’s not yet enough to call a trend, he also is beginning to see “baby boomer kids,” certain elder boomers’ children who now are reaching their 30s and who have good jobs and some family money behind them.
Michael Monihan, of Monihan Realty in Ocean City, also counts many baby boomers among his clients.
Recently, he said, he has noticed an uptick in “second and third generation business owners,” clients who were fortunate enough to inherit niche-market companies that are now being bought out. They’re turning to the Jersey Shore second-home market to invest the money they’ve made from their business success, he said.
Over on the mainland, the buyer profile is somewhat different.
Mainland buyers, as a general matter, typically do not have the same existing funds available as their boomer counterparts on the barrier islands. Realtors in the interior communities of the county say the economy has affected their boomer clients significantly.
Jim Rixey, of Rixey Realty in Cape May Court House, said that most of that longtime firm’s customers are “year-round people relocating from another location.” They’re finding their search a bit more difficult in light of financing requirements, he said, because banks are requiring more money down as a result of the banking industry’s recent difficulties with subprime loans.
Rixey noted that Realtors can compensate for market changes of this nature by making sure customers are educated on the alternatives available to them. To help with financing concerns, for example, Rixey ensures that qualified customers learn about the government’s FHA program, which requires a minimal down payment.

Added Value

All of the boomer groups share a desire for value in their investments, whether that means intense personal use of the property, deriving some rental income, waiting for a long-term return, or some mix of these factors.
Quintin noted that today’s second home buyers tend to be well-educated, and, while their motivations to purchase may change over time, they’re uniformly savvy about financial issues.
“They all recognize value in our market,” he said.
Along with favorable pricing and rental income, there are intangible factors that add value to a property.
As Monihan put it, “these are buyers who are saying, ‘We came here as kids and we want our family to have that same experience.’ ”
Such buyers realize that their investment will be relatively long-term, Monihan said.
“It’s almost easier to say who’s not buying,” commented Steve Booth, of Prudential Fox & Roach in Ocean City, when asked about demographics of current buyers. “That would be speculators, developers and builders.”
“Generally, the second-home buyers now are people who are familiar with Ocean City and want to have a place here for their families and themselves,” Booth noted.

Feeder Areas

According to county statistical reports, almost 50 percent of homes in Cape May County are second homes whose owners maintain primary residences in other locations, and the barrier islands contribute heavily to this statistic.
Quintin noted that some 90 percent of his customers are second-home purchasers and, despite some shifts in purchaser motivation, they’re coming from exactly the same geographic areas as those who purchased when sales activity was even higher.
Quintin, who regularly prepares zip code analyses showing where buyers own their primary homes, said that 93 percent of purchasers reside year-round in either Pennsylvania or New Jersey.
“Sixty-five percent are still coming from the Jersey side of the Philadelphia bridges,” he said. “Towns like Haddonfield, Medford, Moorestown. The rest are from the Philadelphia side – typically, suburbs.”
“Almost the entire market comes from within a 60-mile radius of Philadelphia,” Quintin noted.
Monihan agreed that “the major thrust is still from the Delaware Valley, including a large portion of western New Jersey and the Philadelphia suburbs.”
Though he has seen a slight increase of purchasers from northern New Jersey and New York, Monihan said, purchasers from those areas are more apt to head for locations north of, and including, Long Beach Island.
Interestingly, the geographic mix of buyers in Cape May is somewhat different.
Chris Clemans, of Chris Clemans & Co. Realty in Cape May, said that, while Delaware Valley communities may predominate, a significant number of buyers of Cape May properties also come from northern New Jersey, New York, Maryland and Virginia.
One factor drawing those additional buyers, Clemans suggested, is the DRBA ferry service that eases trips by commuters from the south. Cape May is pretty much their first beach-side stopover after they reach the ferry terminal in North Cape May, she said.
Another factor may be found in historic visiting patterns, or tradition. Many buyers in Cape May, said Clemans, are from families that have visited the city for generations.

“The Real Buyer”

February to May is the peak selling time for second homes on the barrier islands, according to Quintin, with sales over the next four months representing the major portion of the year’s transactions.
Real estate professionals say that understanding buyer demographics and trends is a prime key to putting together successful transactions.
All in all, Booth concluded, “We’ve moved back to the ‘real buyer’ – the guy who wants to go to the boardwalk and walk the beaches with his family.”

Carole Mattessich can be e-mailed at gazette@catamaranmedia.com or you can comment on this story by calling 624-8900, ext. 250.