Sunny skies and dazzling interest rates are luring home shoppers back to the seashore resorts in Maryland and Delaware.
In Ocean City, midpriced condominiums in the $100,000 range have been selling well, Realtors say, while Delaware's seashore cottages have held their high prices, sending Delaware home-buyers inland in search of more-affordable areas.
Real estate sales in Ocean City got off to a sluggish start this year but have picked up speed, according to Jean H. Jerread, executive officer of the Greater Ocean City Board of Realtors.
Besides consumers' wariness about the economy at the outset, she said, Ocean City endured a rainy spring that washed away many potential sales at a time that's usually bustling with vacation home-buyers.
Paul Faulstich, owner of Leland Realty in Ocean City, said home sales were down through the end of June. Mr. Faulstich who tracks Worcester County home sales through his Worcester Information Network, said sales for the first six months of the year totaled $86,907,130, down from the $105,702,666 in sales for the first half of last year.
But Mr. Faulstich expects sales to pick up this fall: "As soon as Labor Day hits, we get busy."
The Worcester Multiple Listing Service reports that average condo prices were down $2,548 the first eight months of this year, to $97,548. However, the average price for individual homes increased $4,527, to $106,010.
While last year's shoppers were often able to bargain with home sellers, Ms. Jerread says "the average selling price this year is closer to the listing price. The sellers are not willing to negotiate."
Rather, sellers are content to let their properties linger on the market while they wait for their price, because they know they can continue to draw income on the property during summer months, says Robert Warfield, president of Moore, Warfield & Glick in Ocean City.
While the condominium market in Ocean City is especially active for midpriced units, higher-priced condos -- those in the $125,000 to $150,000 range -- are becoming popular among vacationers ** from New York and New Jersey.
"We are reasonably priced, compared to the Jersey shore," says Sue Haslam, owner of Haslam Resort Realty in Ocean City. She said shoppers who buy in Maryland after comparing prices at more-northern beach resorts feel as if they've gotten a bargain.
Many who do buy are also opting to put more money down and lessen their monthly mortgage bill. Because their bank accounts are earning such low interest, buyers are putting down 20 percent to 30 percent in cash, Ms. Haslam said.
Although Realtors say they have plenty of traffic through their doors, they also are having to work much harder for each sale. People are shopping for the best deal and looking at many more properties before making a decision.
There was a time when people would come to the resort on vacation and decide to buy a house within two days, Mr. Faulstich says. "Now they take their time before they buy."
But the days of the quick sale also marked a time when it was more favorable for tax purposes to have rental income.
It was after the 1986 tax reform law removed some of the tax breaks for second homes that the real estate prices started to drop. "Now we are seeing prices come back to what they should have been," Mr. Faulstich says. "The prices have not gone through the floor."
Those who entered the real estate market when it peaked around 1986 and 1987 may have to settle for listing the house at the original sale price, with no appreciation.
Instead of real estate speculators who flocked to the real estate market to take advantage of the pre-1986 tax laws by buying several properties to rent, now there are more buyers who are retirees looking for single-family homes to use in their retirement and younger people who want a second home that they reserve for their own use, Mr. Faulstich says.
Realtors report that resales seem to be well-distributed between oceanfront, ocean block, bayside and bayfront models. Ocean City has little available land, but some new-home projects that were started several years continue to open new sections.
One is the Island at Hidden Harbor off 125th Street on the bay. The 32-acre development has been under construction for nine years, with 350 condominium units built in the 537-unit project. Each home has a water view, and there also are facilities to dock boats.
The two- and three-bedroom units come fully furnished like much of the new development in the resort area. In addition to furniture, homes at the Hidden Harbor development come complete with appliances and kitchen utensils. The homes, which sell for between $140,000 and $195,000, have sold primarily as second homes to people who eventually plan to retire there, says sales manager Ed Wehnert.
Condominiums may dominate the Ocean City market, but the situation is reversed at the Delaware resorts north of Ocean City, where there are largely single-family homes.
"In Delaware, we have an abundance of single-family homes and cottages [compared to Ocean City]. We do well with that because there is a limited supply," says John O. "Skip" Valliant, president of Seacoast Realty in Bethany and Dagsboro, Del.
Delaware has strict ordinances that restrict development and keep density down near the beaches.
Low density also translates to higher prices for a home on or near the ocean in Delaware than in Maryland. If you want one of those sprawling oceanfront homes near the Rehoboth Beach boardwalk, plan on spending about a million dollars, Mr. Valliant says.
A Bethany Beach home near the ocean that sells for about $275,000 jumps in price to about $900,000 if it is on the beach.
To find something more affordable, people are willing to drive a few minutes inland in Delaware to Millville, Ocean View, Dagsboro and Frankford, where they can buy a one-acre lot for $30,000, Mr. Valliant says.