Ocean City starting price around $1 million, but number of listings is far off
OCEAN CITY — The new normal starting price for Ocean City real estate is $1 million – without considering location and amenities.
According to John Walton of Keller Williams Jersey Shore, Cape May County took the top spot in the country among the 20 best luxury vacation home destinations and purchases for 2024.
The annual award is presented by Pacaso.com, which analyzed the top U.S. luxury vacation home markets based on significant increases in second-home activity and demand for properties priced above $1 million.
However, local barrier island listings were down throughout the year, he said, noting the island used to reach 1,000 available listings but now averages 237 — “that’s almost an 80 percent decrease” — and the prices have tripled since 2016-17.
According to data, there were 585 sales on the island in 2024 totaling $719,130,453. The median sales price was $975,000 and the median number of days on the market was 27. The average number of active sale listings was 210.
For comparison, there were 942 sales in 2018 totaling $642,533,000. The median sales price was $535,000 and properties were on the market an average of 53 days.
In 2005, there were 1,206, sales totaling $858 million. The median sales price was $607,000 and average number of days on the market was 68.
Last year, instead of the pre-pandemic norm of 50 new listings per month, the northern barrier islands (north of Sea Isle through Ventnor) averaged 30 listings per month.
In 2024, there were more than 1,400 sales on these northern islands, of which 385 sold for more than $1 million.
There were more than 1,100 sales in 2024 on the southern islands of Strathmere/Sea Isle City through Cape May. More than 383 of these properties sold for at least $1 million.
Walton said agents who used to carry 40 to 60 listings at a time now are lucky to have a dozen. He said that while the number of transactions was down, sale prices remained stable.
“Prices are not falling because the real estate market is about supply and demand. A low supply means higher demand and prices stabilize or rise,” he said.
Walton said that while many agents are content with higher prices — “because $1 million is said out of everyone’s mouth like it’s nothing” — fewer listings means fewer sales and fewer slices of pie for everyone.
“One of the main rules is you have to have inventory on the shelf to prosper,” Walton said. “Imagine walking into a market and you see bare shelves, or a section closed. Fewer products means less opportunity to do transactions.”
Chris Monihan of Monihan Realty said rentals dropped for a second consecutive year but from a record-high in 2022 driven by the COVID-19 pandemic.
“We were still super busy, the town still packed for the summer,” he said.
Regarding sales, he said the same issues affected the market as in the past couple of years in which “inventory was still so, so low but buyer demand is still there to purchase. It requires just finding the right property and can take a bit of time.”
He believes weather certainly affected the market, with a lot of rain in the spring leading to a slow second quarter but the heat of summer lasting into November driving a strong fall season.
Monihan said the extended hot weather kept the vacation vibe going, leading to more action in the fourth quarter.
Walton believes the lack of inventory may lead to a decline in services, either through fewer agents or budgetary cuts. He said there are more than 600 agents licensed with the Ocean City Board of Realtors but fewer than 50 doing consistent business.
With everyone making less money, “are they going to pay the $1,000 dues? Are experienced agents going to cut back on marketing, on services?” Walton said. “There’s still a muddy picture of compensation.”
The Consumer Protection Enhancement Act (CPEA) signed by Gov. Phil Murphy in July went into effect Aug. 1, requiring a lot of learning on the fly for agents. It aims to provide additional protections for consumers engaging in residential real estate transactions.
Among the conditions is the requirement for sellers to provide a fully completed property condition disclosure statement before buyers are contractually obligated.
The CPEA also allows a designated agency, which enables a brokerage to appoint different agents to represent both the seller and the buyer with full fiduciary duties at the client’s request.
Brokerage Services Agreements that outline services provided to all clients over the course of a respective transaction are also required.
The act also prohibits sellers’ agents from disclosing compensation in Multiple Listing Services or notifying MLS about cooperative compensation, if prohibited by MLS policy.
In August, brokers were scrambling and learning daily what the new laws entailed, and consumers were learning as well about what was required to be a participant in real estate transactions.
Walton said institution of the CPEA means “more than ever, one should work with a qualified, informed real estate agent who understands the new regulations and their intent to protect the consumer.”
However, it raises questions for the market going forward.
“A lot remains to be seen at the end of March or in April, during phase 2 of this act of compensation and representation, proof of funds and seller disclosure,” he said.
He also wonders whether the market will diminish with fewer slices of pie for agents to make a living.
“The mindset of agents planning economic situations and futures is not so exact anymore,” he said.
Another major thing that affected the local market is the mortgage rates. Walton said people are not selling homes with mortgage interest rates of 2 percent to 3 percent to buy something and pay 7 percent.
“The Fed announced it would remain restrictive on lowering interest rates until its goal of taming inflation reaches 2 percent,” Walton said.
Pete Madden of Goldcoast Sotheby’s International Realty said the agency had a good year “despite the down market, which is still a struggle.”
Madden agreed that interest rates affected the market. He said because of high interest rates, a lot of people don’t want to sell and prices remain high.
“The interest rate, even when cut, the rate to consumers went up and your average buyer anticipates a federal rate cut to bring a consumer rate cut,” Madden said. “Fortunately we are in a market that people want to be a part of.”
The city council president said the CPEA did not have as drastic an effect on the island’s second-home market as possibly elsewhere, mostly because local agents already were doing many of the things required.
“We are in a market where buyers and sellers rely on us a tremendous amount as their boots on the ground,” Madden said, noting seller disclosure statements already were a norm.
Monihan said high interest rates were a factor but again, not as much as in other markets. He said lower interest rates would drive competition, making it more difficult for buyers, and that the difference in monthly payments could be made up by simply renting a home for two weeks.
“I think you did see more cash buyers or people know they are what they are and are willing to buy now and can always refinance,” he said, noting the stock market has been up, easily offsetting the increase in the interest rate.
Monihan said the market remains strong, contrary to what many believed in 2022, and the outlook for 2025 is good.
“They said the market has got to crash and it hasn’t. I don’t see what would force the prices to go down right now,” he said. “I think it’s a good time to buy and a good time to sell.”
– By CRAIG D. SCHENCK/Sentinel staff
