This summer’s Jersey Shore rental market is lagging more than usual, and surprisingly, it has not gotten a big boost from the drop-off in prices on the sales side, a phenomenon that often takes hold when the economy sours.
Agents and brokers at the shore said they have seen a drop in rental traffic in some areas and an increase in the number of renters securing last-minute deals for the peak periods of late July and August.
Nonetheless, they insist that the market remains strong compared to the rest of the state, because of interest in living by the ocean and because some people have opted to spend their vacation time there this summer instead of traveling farther from home.
Donn O’Brien, a sales associate at Ager Realty on Long Beach Island, said more middle-income vacationers have opted to spend time at the shore this summer. But he added that many of the vacations have been shortened to day trips from week-long trips of the past.
O’Brien attributed that to the rising price of gas and food that has left many pinching pennies.
“Expendable income is a problem,” he said. “The middle-class people who made up our rental market are having problems.”
O’Brien said the downgrades are hitting several categories of renters. In addition to the day trippers, he said more regular shore-goers who in the past have rented for several weeks or even the entire summer are taking one-week rentals this season. And, he said, more rental houses are packed with grandparents, aunts, uncles and cousins in order to bring costs down. That is despite that fact that rental prices are down 15 percent compared to last year on LBI.
Ed Kohlmeir, a broker with Newbern Realty who specializes in LBI, said the island’s sales market has been very similar to the rental market, with the middle-income being priced out this year.
Kohlmeir said the higher-priced homes (which he classified in the high six-figure and low seven-figure range) have been selling well, but that homes priced in the midrange have seen sluggish sales both this year and last year.
The impact of the skittish economy has also reached the real estate market in shore communities off of LBI.
Ron Giordano, a broker with Atlantic Beach Realty who specializes in Avalon and Stone Harbor, said he has been seeing a similar dynamic at play: The middle-income vacationers have been skipping summer rentals, while the high-end sales market has remained strong, even in recent months.
“The high end is reaching new levels; the middle range is staying the same,” Giordano said. “The rich are getting richer. Beachfronts are hitting $13.5 million.”
Giordano said the rental market struggled in June, prompting many owners to slash prices in order to secure takers. He said July and August prices have remained the same as last year because they are still peak beach times.
Other brokers said the doom and gloom is overblown and that the sales market has been steady at the shore.
Judy Appleby, owner of Appleby Realty in Seaside Park, said the spring sales market was pretty good. She said she expects the fall market to remain steady. And, she said, for the summer, she has been concentrating on rentals.
“My rentals have been pretty decent,” Appleby said. “They are now filling up. The weather has been cooperating. The majority of our [renters] are from New Jersey.”
Appleby said prices have remained level compared to last year, around $600,000 for a single-family home in Seaside Park and the surrounding communities. But she noted that homes closer to the water are actually seeing price boosts in some cases. Meanwhile, she said two-bedroom rentals have been going for between $1,200 and $2,800 a week — the same as they were last year.
However, O’Brien of Ager Realty noted that he has been seeing a 10 percent price drop on homes for sale on LBI.
Meanwhile, developers are still selling and renting some new-construction homes and condos along the Jersey shore.
Applied Development Company recently launched the second phase of its Pier
Village development in Long Branch, which is about 60 miles from Manhattan in Monmouth County.
Built on the site of a former boardwalk amusement park, Pier Village’s first phase opened three years ago with a mix of rental units and beachfront retail space. The second phase will open later this year with 215 rental units and a 24-room boutique hotel. The third phase is scheduled to launch next year with 200 rental units, 100 condos and a 100-room hotel.
Pier Village is leasing residential space at $26 a foot. Greg Russo, a principal with Applied, said the first phase has been entirely leased out for both the residential and retail space, and 30 apartments in the second phase have been leased.
The project is part of a major redevelopment project Long Branch’s city government has been implementing. Russo said that while the company, which has been doing several projects in Jersey City and Hoboken, is interested in doing other projects at the Shore, it is not an area of the state conducive to new development projects
going forward. The shaky economy aside, he said: “There is not a lot of available
land left.”