On the House: Gauging Shore's market: 2014 offers mixed signals

Inevitably, beach weather will arrive this year, so it's time to take a trip to the Jersey Shore to check out the residential real estate market there.

When we deal with the Shore, of course, we are looking at sales of both primary and second homes.

And we need to look at the 2014 market, which Kevin Gillen, chief economist at Meyers Research and senior research fellow at the Lindy Institute for Urban Innovation at Drexel University, describes as behaving "with schizophrenic uncertainty."

As most of the nation's housing markets made steady progress toward recovery, the most recent Shore numbers showed far less consistency.

Both "house prices and sales are either surging, remaining flat, or even falling, depending upon where you look," Gillen said.

Based on data from Berkshire Hathaway Home Services Fox & Roach Realtors, Gillen said, the typical home's value at the Shore fell 0.2 percent in the fourth quarter but ended the year up a net 1.9 percent.

"However, this average result is all but rendered meaningless, given the wide dispersion in house-price changes across different Shore communities," he said.

From most negative to most positive, the average change in house prices ranged from a drop of 4.3 percent in Ventnor to an increase of 2.9 percent in Margate, he said.

Prices were largely flat in the fourth quarter, but sales volume was "exceptionally strong," Gillen said.

Eight hundred and fifty-one homes sold in the last three months of 2014 versus 696 during the same period in 2013.

Sales activity, in fact, was above the peak years of the housing boom in 2006-07, "when sales in these communities averaged between 600 and 700 quarterly transactions," Gillen said.

He called the Shore's housing market "disparate," with prices recovering in some communities but sinking in others.

Previously owned homes are performing differently from newly constructed dwellings, and some municipalities are seeing significant amounts of building while others are not, Gillen said.

Stephen C. Booth, BHHS Fox & Roach Realtors' vice president and regional manager in Ocean City, said the differentials in market performance are the result of "fundamental differences" in the typical home buyer in each community.

The typical million-dollar buyer is the affluent second-home purchaser from Philadelphia and its Pennsylvania and New Jersey suburbs, Booth said.

Atlantic City sees the less-affluent primary-home buyer or someone purchasing a weekend getaway near the casinos, he observed.

Casino closings in Atlantic City have dampened demand for property in that area, while the rest of the Shore depends on a strong Philadelphia and national economy, he said.

To illustrate the disparities, Gillen compared Atlantic City with the Avalon/Stone Harbor market since 2006.

From 2006 to 2010, the average Atlantic City house price fell 75 percent, while it was down 28 percent in Stone Harbor and Avalon, he said.

Though Avalon/Stone Harbor's prices are now 15 percent above where they stood when the market here hit bottom in 2010, they are 114 percent above their previous peak nearly a decade ago, Gillen said.

Atlantic City's prices are where they were in 1994, he said, noting that in the fourth quarter they saw their first positive appreciation in nearly eight years.

"There is some evidence that Atlantic City may have hit bottom," said Michael Busler, professor of finance at Richard Stockton College of New Jersey, pointing to more than $500 million in new, mostly residential, projects designed to "lure people back to the city."

"We may see the beginning of the turnaround this year," Busler said.

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