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Beach Buys
The housing market at the Shore may have survived Sandy
By Terri Akman

Tom and Rita Christensen always liked the idea of a beach home as a place for family gatherings, but they never thought they could afford one. Then out of the blue, a family friend who sold real estate called with a must-see property, a new custom built four-bedroom home in Ocean City.

Unknown-1 (1)“It was really a secret dream, and it happened within a three week period,” says Rita, 58, a Berlin Borough resident. “The interest rates were so low, and the timing was just right – the builder was ready to sell. We were supposed to settle on October 30, our 36th wedding anniversary, which is also mischief night! But on the eve of October 29, we sat on our sofa watching the ominous weather reports – Superstorm Sandy – thinking our dream house was going to be a pile of splinters.

“The island was closed on the 30th so we couldn’t cross the bridge to Ocean City to assess the damage right away. The home had hurricane-proof windows and was built 10 feet above the ground on pilings. To our relief, there was minimal damage. A neighbor who hunkered down in the storm said a tidal wave literally went through our brand new house. But the only damage we sustained was two or three feet of water in the garage.

“The builder came in two or three days later, knocked out the drywall, mitigated the home for any kind of mold and reassessed the crawl space under the home. The mortgage company said we’d lose our interest rate if we didn’t get to the settlement table by November 9. We know we are very blessed, especially after hearing about the losses sustained by others.”

A similar situation was playing out 40 miles up the shoreline for Joseph Pezzuti, who also dreamed of owning a Shore house where his family could create lifelong memories. The 40-year-old father of two realized his dream when he found a four-bedroom, one-bathroom fixer-upper on the lagoon in Beach Haven West, just across the bay from Long Beach Island.

“With two kids, I thought I could never afford it, but this past summer prices were going down and the rates were great,” recalls the Bergen County native. “Two weeks after Labor Day weekend we found a house and made an offer. We negotiated and got the price we wanted. It was a fixer-upper, but I thought we could put the money out to fix it up as we went.

Pizz living roombefore

The inside of Joseph Pezzuti’s Beach Haven home before and after Superstorm Sandy

“Three weeks after we were in contract, Superstorm Sandy hit. At that point I thought we were going to lose the house. I saw the pictures coming back and people were saying how bad it was. I thought this dream of ours was going down the toilet.”

The house did sustain damage – flooded with a foot and a half of water, and the owner didn’t have flood insurance.

“Right after the storm, the owner had us down and he already had the house half-gutted,” says Pezzuti. “He re-did the entire inside down to the studs, put up new sheet rock, and installed new floors and carpeting. The inside looks like a new house. All the stuff we were going to do is Pizz Livingroomafteralready done. It actually worked to my benefit.”

Pezzuti and Christensen are among many new homeowners who recently invested in Shore properties. Sandy aside, beach towns weathered the bad economy of the last few years better than other housing markets, and experts in the southern part of the state – those less affected by Sandy – predict an even stronger 2013 for their towns.

“In Ocean City, the real estate market peaked between the years 2004 and 2005,” says Joe Wilhelm, sales specialist for Prudential Fox & Roach in Ocean City. “Despite the fact that real estate prices were inflated, New Jersey Shore homes were selling very quickly. Then the surrounding Shore community markets dropped in 2006 continuing through 2011.

“I charted sales in Avalon and Stone Harbor from 2005 to 2012, and since 2009 there’s been a steady upward track every year in number of units and total sales volume,” says realtor and New Jersey Association of Realtors (NJAR) Past-President Allan “Dutch” Dechert.

“In 2012, however, Ocean City saw an increase in activity, with 868 properties sold, which was a 20 percent increase over the years 2011 and 2010. One month into 2013, there were 66 properties already under contract in Ocean City, which is double last year’s January numbers. Based on the sales momentum of January 2013, we are expecting unprecedented sales in 2013.”

Even during the lean years, the rental market saw less of a lull. “You had people not taking vacations like they may have once taken,” explains Drew Fishman, past-president of NJAR and a realtor at Re/Max Atlantic, covering Northfield and Absecon. “So that created people taking shorter drive vacations instead of flying, and many came to the Jersey Shore. There’s already a strong flow of new traffic coming in for this season.”

Stone Harbor and Avalon rentals are up year-to-date for the coming season versus 2012, says Dechert. “We’re seeing a strong demand and prices are pretty steady,” he says. “We are seeing more people buying property and not putting it up for rent but keeping it as a second home. There are only ‘X’ number of properties out there so the demand stays high.”

Shore Realtors say those bullish expectations for both the sales and rental markets in SJ are based on many factors, including a stronger economy, low interest rates, reasonable sale and rental costs, and even Sandy’s short-term affects.

“The values have dropped, which makes it a great opportunity and the interest rates are wonderful,” says Fishman. “People are getting more house for the money.”

“Usually our season doesn’t kick in until after Super Bowl Sunday in February, but they came much earlier this year,” says Wilhelm. “A lot of people from up north, like LBI, the Point Pleasant area and Seaside, are not going to have places to go, so we are getting a lot of phone calls in Ocean City. I had one client who had already booked five rental weeks by mid-January, and that’s never happened before.”

But don’t count out the northern beach towns completely. Jeff Gamble, member of the Ocean County Board of Realtors and general manager of the real estate division of the Van Dyk Group, says they are getting a lot of calls to verify that restaurants, amusement parks and other attractions will be open. “We’re glad we’re getting those questions, because if people weren’t asking those questions it means they were maybe thinking of going someplace else. In the short term, I’m not saying there’s not going to be any pain. Of course there is – it was a catastrophe here. It’s going to take a lot of work and a lot of people will be hurt, but in the long run the area is going to benefit in terms of better homes being built.”

“In the areas that saw devastation, people will rebuild because they still like living at the Shore,” adds Fishman. “It’s their peace, quiet and tranquility when they get away.”

New regulations will also protect re-built homes from future storms. “Part of our faring well in Avalon and Stone Harbor was the track of the storm, but part of it was the proactive approach the borough governments have taken in terms of beach replenishment and restoration,” says Dechert. “We tell prospective clients that one of the reasons to buy here is that your investment is protected well by these proactive efforts.”

“I’m a Shore person and these are the risks you always take,” Pezzuti reasons. “Do we know if the storm will ever happen again? It hadn’t happened since the ’60s, when the ocean met the bay and leveled Long Beach Island. I love the Shore too much and couldn’t imagine my life without it. The best times of my life were spent at the Jersey Shore with family and friends. If there are people like me who always wanted their own Shore house, this is the time to do it.”

March 2013
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