Posts Tagged ‘ocean’

The Vacation Home Real Estate Market is back!

Monday, December 13th, 2010

Go ahead and snicker.  This Mountain Man guy is full of bull, you’re thinking. 

Not so fast, my friend.

Sure, the national unemployment numbers are still tough to swallow.  And yes, we are still seeing more vacant store fronts popping up.  Discretionary spending is off, too, though you have to wonder when you see folks descend on a mall and drop hundreds of dollars on trivial junk for Christmas.

But here in Cape May County, New Jersey at the shore, the tide has turned in the real estate market.  Pun intended.  With interest rates hovering around 4% and prices nearly half of what they were in 2005, sales have been brisk.  We’re also seeing that folks are tired of sitting on the sidelines and after five years they ackowledge the opportunity is there to finally purchase and own a vacation home at the Jersey Shore.  If they were 55 years old back in 2005, they’re now 60 and not getting any younger.  I call it the “now or never” syndrome.  If they waited much longer to buy a second home, some would probably just say forget it.

Back in 2004, we began telling our clients that the days of buying pre-construction condos, then flipping them a year later the day after closing, were over.  We saw an overabundance of new construction and sensed that the market was shifting.  Unfortunately, we were right.  We are getting that same feeling again, except this time it’s a turn in the other direction. 

 

We believe that the vacation home market leads the way.  Our real estate market was the first to fall apart, and it is the first to recover.  And why not?  Folks who can afford second homes usually own their own business or they are high enough up on the corporate ladder to have a solid income.  When the national media began their gloom and doom predictions, the frugal upper and upper-middle class folks pulled back and stopped spending.  Now that they’ve endured five years of a recession and the sky hasn’t fallen in, they’re back.

Here at Jewell Real Estate Agency, we have sold 2.5 times more properties this year than in 2009.  We’re not bleeding greenbacks anymore.  Not only are we relieved, we’re very optimistic.  No doubt, it will take the primary home market another two years to catch fire.  But when it does, all will be well in Whoville.

- Mountain Man

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Atlantic City Gambles on Future

Saturday, December 26th, 2009

Since Atlantic City, New Jersey approved legalized gambling back in the late 1970s, the city has always been in the shadow of Las Vegas.  Everything the tarnished city did to revitalize and rebuild and build a world-class casino atmosphere drew comparisons to Vegas.  And frowns.

Meanwhile, the “Little Engine That Could” plodded on, eventually erecting 13 casinos.  The first, Resorts Atlantic City, opened in May, 1978.  A year later Caesars debuted, then in December 1979 Bally’s opened.  The Sands, Harrahs and the Hilton each opened in the latter half of 1980 and the Playboy Casino and Tropicana were ready for business in late 1981.   Atlantic City now had eight casinos.

 The recession of the early 1980s (sound familiar) halted construction while prospective casino companies sat out the downturn and waited for the economy to get going again.

Trump Plaza got things moving again, opening in May, 1984, then Trump Marina debuted a year later.  The Showboat opened in 1987 and the Trump Taj Mahal in 1990 and then new construction came to a halt.  Time to once again wait for better times.

In 2003, the first modern mega-casino, the Borgata, opened to grand revues and it continues to this day to be the top earner in the city.  The Playboy Club Casino, of course, has long since been closed, then torn down. 

The Sands was torned down in 2007 by Pinnacle Entertainment after purchasing the obsolete casino and its 20 Boardwalk/oceanfront acres for $400 million.  Pinnacle has not begun construction and the company refuses to comment if the $1.5 billion megaresort will ever be built.

Meanwhile, MGM and Boyd Entertainment purchased a 72-acre lot next to the Borgata, envisioning a 3,000 hotel room, 280,000 square foot casino resort to be called the MGM Mirage.  Plans for that project are “on hold” until the economy improves and funding becomes available.

One new Atlantic City hotel casino, the Revel, is about two-thirds through the construction phase.  They broke ground in November, 2007, but in January, 2009 had to lay off 400 workers, leaving 500 to get the steel work and exterior completed.  They need another $1 billion in funding to finish the $2.5 billion project, which is still hopefully scheduled to open in the summer of 2011.  The Revel is 53 stories high, with 1,800 rooms, 20 restaurants, 40 retail stores, and a 5,000-seat theater, plus 150,000 square feet of gambling.

Atlantic City reacted to gambling being legalized in many more states by improving its non-gambling options for visitors.  Shopping opportunities within walking distance of the casinos include the 27-store The Quarter, The Walk with 47 stores, and the Piers at Caesars with over 50 stores.

However, the approval of gambling in Pennsylvania poses a new threat.  The casinos in AC once employed 40,000 people, but that’s now down to 36,000.  Gambling competition also comes from nearby Delaware, New York, and the Indian casinos in Connecticut.

Atlantic City must once again reinvent itself.  The more non-gaming options the better.  The city owns 140-acre Bader Field, a former small airport, just outside of town but practically in the shadow of the casinos.  Maybe a theme park or something similar is the answer.  Whatever, it has to be a FAMILY destination.

If the casinos are to prosper, they must break their long-standing tradition of not supporting anything outside walking distance of their establishments.  Minor league baseball didn’t fly, and pro hockey and basketball were also financial flops.  The casinos must get behind some sort of grand family entertainment at Bader Field.  If not, their market share will continue to drop and Atlantic City, within a four hour drive of 30 million people, will be the punchline of many a joke.

- Mountain Man

http://www.MountainManandCityGirl.com

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Baby Boomers will be replaced

Saturday, December 12th, 2009

Most people would agree that the real estate market of the last 15 or 20 years has been fueled by the Baby Boomers.  As you know, that’s the 80 million Americans born between 1946 and 1964, and now ages 45 to 63 years old.  They’ve had careers and saved money and invested in real estate, stocks, and retirement plans, amongst other things.

The next generation has been called “Generation X”, originally called the “Baby Bust” due to the low birthrate in America.  They were born from 1965 to 1979, with the latter half mostly children of early Baby Boomers.  They are now 30 to 44 years old, but they are just 48 million strong.  With the average age of a first-time homebuyer pegged about 33 years old, they are filling that niche right now while the Baby Boomers upgrade to add vacation homes or downsize to smaller homes as “empty nesters”.

The next group to arrive was Generation Y, those born between 1980 and 1995.  Now 14 to 29 years olds and children of the latter half of the Baby Boomers and the early Gen X’ers, they will be the next group to arrive on the real estate scene.  The exciting news for the real estate industry and the economy of the United States in general is that there are 74 million of them.  They should eventually have the economic impact equal to that of the Baby Boomers.  Tattoos and piercings and all, this generation will soon enter the first-time homebuyer market and take their place on the economic ladder until they are perhaps 60 years old or so.

As the population demographics shift from one group to another, there will always be a new generation to carry the day.  Isn’t that why we reproduce?

- Mountain Man

http://www.MountainManandCityGirl.com

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A Real Jump-Start

Friday, December 11th, 2009

Nearly a year into the Obama administration I think Americans can see that the No.1 issue in the nation’s mind – the economy – is still sputtering.  Bank bailouts and all that stuff just aren’t working fast enough.

As Mighty Mouse used to say, “Here I come to save the day!”  So here’s my simplistic approach to ending the Recession.

The United States of America has the highest bond rating possible – AAA.  That rating means that the U.S. is not likely to default on debt.  Thanks to the Bretton Woods Accord back in the 1970s, the U.S. dollar is no longer backed by the gold in Fort Knox.  The American dollar – of which there are 829 billion – is backed by the government’s ability to generate revenue to pay down it’s debt.

New dollars are issued when the Federal Reserve elects to fund the purchase of debt, which is usually through U.S. Treasury Bonds.  Done in excess, this can cause inflation, but bear with me.

The net worth of Americans is currently $53.4 trillion.  Prior to the Recession, it was $64.5 trillion.  In other words, we’ve lost 17.2% of our worth.  By the way, $348 billion of our collective $53.4 trillion is household real estate holdings, i.e. your house.

That’s the background, now my proposal.

Let’s give each American household $10,000 tax free.  With 105,480,101 households, that’s $1.05 trillion.

There are 7.7 million businesses in America.  Let’s give them each $100,000 tax free.  That’s a mere $770 billion. 

So add it up and the American government can print and distribute $1.82 trillion.  This isn’t money raised by taxes.  We’re just gonna print it and give it out.  There’s just one stipulation – the money can’t leave the country.  It can’t be sent to relatives in Nicaragua or used to hire workers in China.  It has to be spent in the 50 states.

Think of the ramifications.  The boost to the economy will be incredible.  Some people will pay down debt or save their homes, while others will buy TVs, cars, and yes, useless junk.  Some might even use some of the money for booze, cigarettes, and methamphetimines, but that can’t be helped.

All this will turn into many of the 7 million people laid off from work since the beginning of the Recession getting gainful employment again.  For every dollar currently in circulation, there will now be three dollars.  Banks will start lending again and the good times will roll.  States will see an increase in sales taxes collected, easing their budget pains.

The nay-sayers will yell that my plan will cause inflation.  Sure, it will.  But it’ll be manageable, maybe 10% at most and it will be a one-time thing, just like my giveaway windfall.  But the trade-off of jobs and reduced personal debt is well worth it.  The American economy will have the jump-start it needs.

Some might call my plan crazy.  But at least I have a plan.

And I bet you’re smiling and already thinking about how you’d spend your $10,000. 

- Mountain Man

http://www.MountainManandCityGirl.com

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Wildwood recall successful

Thursday, December 10th, 2009

“Surprise, Surprise, Surprise”, as Gomer Pyle used to say. 

To the surprise of many, including this ardent Cape May County observer, voters successfully recalled City of Wildwood Mayor Ernie Troiano and Commissioner Bill Davenport in Tuesday’s special election. 

The first part of the ballot asked whether voters wanted to recall the pair.  Voters went 624 to 487 to recall the mayor and 649 to 470 to unseat the commissioner.  Apparently there was enough dissent within the community to overcome the regular party machine.

The second part of the ballot then asked to vote for two of the six candidates.  With only about a dozen or so provisional ballots not yet counted, the vote went:

Ed Harshaw 600, Al Brannen 577, Troiano 496, Davenport 453, Ernesto Salvatico 45, and John Roat 42.

And so Harshaw, a real likable high school history teacher, and Brannen, who’s been a thorn in the administration’s side, take over a city with the highest tax rate in Cape May County and a mountain of debt.  They join Commissioner Gary DeMarzo, the controversial third commissioner.

The trio will decide amongst themselves who will be mayor and they haven’t hinted publicly yet whom they each will vote for. 

The outgoing mayor took a parting shot, not indicating whether or not he knows exactly who will be the new mayor.  “The only thing that bothers me is you’ll have an absolute nitwit for a mayor now.”

- Mountain Man

http://www.MountainManandCityGirl.com

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Bank of America isn’t

Thursday, December 10th, 2009

If you have credit cards – and who doesn’t? – you probably got a notice in the last few days from Bank of America.  The letter said that your credit line has been reduced to a few hundred dollars.  The tens of thousands of dollars of available credit or cash you had the week before is suddenly gone!  Merry Christmas.

Chase Bank and Bank of America, which merged with Merrill Lynch in 2009, pretty much have the credit card business all to themselves.  These two giants of the financial world control the credit destiny of tens of millions of Americans.

So why would Bank of America suddenly cut off five or ten million hard-working American families from having credit lines?

 

This past Tuesday, December 8, Bank of America paid back the $45 billion it got from the U.S. Government in the big bank bailout.  It did it with about $19 billion in cash and the balance by selling off securities.  To make sure they had the cash on hand, B of A apparently needed to make sure you couldn’t borrow any of it.

Here comes the kicker.

Bank of America paid back the $45 billion to the U.S. Treasury so that they would no longer be bound by the rules that were instituted as a condition of using the bailout funds.  Since the CEO of B of A recently announced his resignation as of December 31, the board of directors has been searching for a new CEO.  It seems they feel that they can’t offer “proper incentives” to attract a quality CEO and accepting the government grant money limited the bonuses allowed to be paid to the company’s top management.

So, to make sure they can offer their new CEO $50 million or $100 million in bonus incentives, they cut off the credit of millions of American families! 

Where’s the public outrage?

- Mountain Man

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A Real Person on the Phone

Tuesday, December 8th, 2009

I read a Letter to the Editor in today’s Press of Atlantic City that addressed one of my many pet peeves – not getting a real, live person on the phone when you call a business.

Isn’t it annoying?  Especially when you know there’s a bunch of slackers sitting there probably drinking coffee and eating doughnuts and listening to the phone ring.

Automated answering systems are impersonal and make you feel like your business is not appreciated.  As the Press letter states, the worst scenario is when your first prompt is “Press 1 for English”.  Arrrgh!

And this all brings me to mention Jewell Real Estate Agency.  We don’t have an automated system.  We ALWAYS have a live person answer the phone.  I’m not talking just during business hours, but 6am to 9pm every single day of the year.  That’s 15 hours a day that one of us is there to actually take the receiver off the hook and say, “Good morning (or afternoon or evening), Jewell Real Estate Agency, Joyce (or Chris or Douglas or ….) speaking”. 

We will NEVER, NEVER, EVER have an automated system.  You’ll never hear “Choose from the following menu options” or “If you know your party’s extension, dial it now”.  It upsets me just thinking about the idiot companies that do this.

In this fast-paced world, isn’t it nice to know that somewhere out there you can speak to a real live person.  If you ever call 609-729-8505 or 609-463-8423 and you get an automated system with extension options, then guess what?  You missed my funeral!

- Mountain Man

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Feeding at the Public Trough

Monday, December 7th, 2009

While most folks are struggling to make ends meet in this depressed economy, New Jersey government and municipal retirees are cleaning up.  In fact, 428 retirees pull in over $100,000 per year in pension money.

In 2008, the median pension in New Jersey was $61,800 for police and fire retirees, $81,700 for State Police, and $43,200 for teachers.  These figures are more than the salary – yes, salary – of the average New Jersey worker, which is $37,900.

In a state with an $8 billion budget deficit this year, the $5.7 billion in pensions is an unfair drain on taxpayers.  To add insult to injury, the state and many municipal governments have failed to keep up with fully funding these pension funds, meaning the public will get increasingly larger bills each year.

So what to do?

Obviously, the system needs to be changed.  The thought that a fireman or policeman can work from age 21 to 46 and collect substantial sums of pension money after this 25 years, then start a second career, is unconscienable.  Newly hired state employees, who could retire at age 55 as of 2001, have seen outgoing Governor Corzine increase that back to age 60.

It appears that legislators are fearful of reigning in the money grab by retirees.  So taxpayers will continue to fund this act of greed through real estate taxes, which are already the highest in the United States.

There is one group that won’t be funding the pension through real estate taxes.  Did I mention that one-third of these pensioners have moved out of New Jersey?

- Mountain Man

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Lower Township tax assessment

Saturday, December 5th, 2009

Lower Township, which includes such areas as Diamond Beach, North Cape May, and Villas, has decided to do an in-house reassessment of properties.  No, not to increase the value of properties, but to lower them.

It seems that when Lower did its last assessment in 2007, the implications of this recession were not fully evident.  But now three years of a down market in real estate have seen these assessments appear to be 20% or more too high.

That 2007 assessment tripled the township’s ratables from the 1992 figure of $1.5 billion to over $4.5 million.  The new reassessment will be done by the municipal tax department, meaning there will be no on-site inspections.  It’s strictly a numbers crunch.  It also means that the cost will be just $25,000, instead of the million dollars for a full-blown reassessment by an outside company.

Properties expected to see the biggest drop in values are those near the water, i.e. the Delaware Bay and Atlantic Ocean.  Hopefully Diamond Beach owners, who have historically been a cash cow for Lower despite fewer services and no fire station, will get a fair shake this time around.

Speaking of Diamond Beach, the new Grand condominium complex, located beachfront on Atlantic Avenue, was originally touted by developers and officials as bringing as much as $6 million in new property tax revenue to Lower Township.  With one of three buildings completed, just $400,000 is being added to the coffers this year. 

The Grand may someday make a big difference in the tax rate, but for now, with Lower this year paying an extra $289,000 in pensions plus a 3.7 % salary increase to municipal employees, that $400,000 from the Grand property taxes has been negated.

Seems like no matter what townships throughout New Jersey do to lower their budgets, the greedy, whiny employees – current and retired – milk the taxpayer far beyond the limits of reason.  That, sadly, will never change in our current political climate of patronage and deal-making.

- Mountain Man

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Recreation Subsidies

Monday, November 30th, 2009

When the recent “Veterans Day Storm” slammed the east coast November 11-15, some Cape May County island homeowners suffered water damage and wind damage to their properties.  For most, it was business as usual and they cleaned up the mess and moved on.  It’s life at the shore for those in the few scattered low-lying streets in Wildwood, North Wildwood, and West Wildwood.

The beaches are another story.  So that local governments could score Federal Emergency Management Agency (FEMA) money, New Jersey Governor Corzine obligingly declared a state of emergency.  The damage to Cape May County, originally ballparked at $89 million, was determined to actually be $27.3 million.  Those beach erosion figures are based on $10.40 per cubic yard of sand to be replaced.  Sand for dunes is calculated up to $20 per cubic yard.

The bigger question here is whether the U.S. government should be subsidizing beaches.  Is it fair to someone living in Iowa to pay for beaches in Avalon rimmed with $4 million vacation homes?

What would homeowners who cry for FEMA beach funds in their communities think if the federal government started funding ski resorts?  Heck, they want snow by Thanksgiving to have a good year.  Should we be subsidizing snowmaking operations at the hundreds of ski slopes throughout the U.S.?  Let’s take it a step further and put refrigeration lines under each ski slope.  That’ll make the millions of American skiers happy.

While we’re at it, why not have FEMA subsidize all the golf courses in America?  In a drought, ship in tanker trucks of fresh water from the Great Lakes and major rivers.  That would please the 24 million Americans who play golf.  They want lush green golf courses, not those spotted with burned out patches of grass.

Do you see my point?

With oceans rising as the Arctic, Greenland, and Antarctic melt, the beach erosion problem has intensified.  Many local shore towns will be doing two beach replenishment projects this year.  Ten years from now, it may necessitate three or four a year, which isn’t going to happen.  FEMA will finally say, “No Mas”.

So it’s time to be proactive.

Where beaches habitually wash out in storms, it is time to rip rap with massive walls of boulders, much like the seawalls recently constructed at the north end of both North Wildwood and Avalon at the inlets.  FEMA should offer to pay for the rip rapping of the ocean.  Sure it means less beaches, but once the seawalls are built, the beaches will come and go.  After all, beaches are always in transit.  It’s just in the last 100 years that civilization decided they’d try to tame Mother Nature.

There will always be plenty of beaches in Cape May County, but people will have to search them out.  Here today, gone tomorrow, but another beach pops up a mile away.  And certain beaches, like Wildwood, which is over 1,000 feet in depth, will always be there.

Like it or not, the days of FEMA beach handouts are numbered.  As they should be.

- Mountain Man

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Tax Credits for Homebuyers

Monday, November 30th, 2009

The popular homebuyer tax credit program, which was due to expire November 30, 2009, has been extended to April 30, 2010.  Adding to the good news is the fact that it is no longer confined to just first-time homebuyers.

The rules are that the first-time homebuyer can not have had interest in a principal residence for three years prior to the purchase.  A current homeowner must have used their existing home as a principal residence for five of the previous eight years.  The first-timer gets an $8,000 credit ($4,000 if married filing separately), while the existing homebuyer gets a $6,500 credit ($3,250 if married filing separately).

All other provisions of the Tax Credit are the same for both first-time homebuyers and current owners.

The prospective property must be put “under contract” before May 1, 2010 and the transfer must take place by July 1, 2010.  The income limits are $125,000 for a single person and $225,000 for a married couple (up from $75,000 and $150,000) for a full tax credit.  A partial tax credit is given for $125,000 to $145,000 for singles and $225,000 to $245,000 for married couples.  Above those incomes is no tax credit.

The maximum price of the property being purchased is $800,000.  The property transfer can not be between dependents (parents and child or grandchild) and documentation of the purchase must be attached to the tax return.  Parents can still, however, co-sign on the mortgage and the child gets the tax credit.

All in all, the homebuyer tax credit is a good deal.  If only it was permanent.

- Mountain Man

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The Voice

Wednesday, January 16th, 2008

Who do you think has the most powerful voice in the world?  You know, the one who most influences people’s opinions. 

It’s not George Bush.  It’s not some presidential candidate or Hollywood star, professional athlete or music idol.  It’s not even the Pope or the Dalai Lama or Bill Gates. 

It’s the MEDIA.  Yes, the media decides what is important and what isn’t.  Who’s good and who’s evil, what is right and what is wrong.  It sways opinion, builds concensus.  It can give someone their 15 minutes of fame or tear down and destroy a person.  Consider how the media has influenced your perception of Anita Bryant, Jimmy the Greek, Vietnam, Patty Hearst, Thomas Eagleton, Walter Mondale, Muhammed Ali, Richard Nixon, hippies, the World Trade Center bombing, John Dean, Mel Gibson, Bill and Hillary Clinton, Paris Hilton, and Hurricane Katrina.  And …, the real estate market.

The real estate market was the darling of the media from 2001 to 2005.  “Buy, buy, buy”, they said, and people did.  But then that story got old and tired.  Time for a new slant.  “There’s gonna be a bust” became the new story.  Folks backed off from the real estate market, choosing instead to sit on the fence to see what happens.  Actually, most were just waiting for the media to say it’s okay to buy property again.  The media hasn’t yet bestowed its blessing on that notion.

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In the second half of 2007, our real estate agency noticed a decided upturn of business in our Cape May County, New Jersey area.  Buyers were coming back.  It seemed to be people mostly in their 50′s and 60′s who came to the realization “What am I waiting for?  I’m not getting any younger”.  If they wanted their piece of the pie at the Jersey shore, now was the time.

 The trend continues here in early 2008, making us wonder when the media will catch on.  Interest rates are under 6%, there is plenty of inventory to choose from, and prices are down about $100,000 from 2004.  To the opportunist, the conditions are perfect to get a good deal.

To those unwittingly hog-tied by the media, they’ll continue to sit on the sidelines.  But for folks who have worked hard all their lives while dreaming about owning a condominium or house at the shore, their time is now!

- Mountain Man

To read more about the real estate market in Cape May County, New Jersey go to our website at http://www.JewellRealEstateAgency.com and click on “Newsletters”.  You’ll find years worth of our Newsletters, full of our thoughts and observations.

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