Real estate market took hit, revived, then thrived in 2020
By CRAIG D. SCHENCK/Sentinel staff
OCEAN CITY — “It’s been a crazy, crazy six months,” said Steve Booth, regional manager for Berkshire Hathaway HomeServices, Fox & Roach Realtors. “We have no inventory — anything that comes on the market for sale that’s priced realistically and is in good condition sells immediately. I don’t think anybody could have foreseen what’s happened.”
Despite the coronavirus-induced restrictions and limitations, Ocean City’s real estate market not only survived but thrived amid one of the most challenging summer seasons in the resort’s history.
Emily Wilkins, marketing director for Goldcoast Sotheby’s International Realty in Ocean City, said the agency had a terrific year.
“Our office is really growing so we had a record-breaking year,” she said, noting the rest of the island did as well. “It’s pretty incredible what the market is doing. The outlook is really strong for 2021.”
The outbreak of COVID-19 in the late first quarter of 2020 hit the New Jersey real estate market hard at a time when local agents were gearing up for the big spring sales and rental season.
Shutdowns and stay-at-home orders in multiple states stopped business dead in its tracks amid uncertainty about the near- and long-term future — delaying closings, showings, sales and rentals.
Statistics show that the hardest-hit states were New Jersey, New York, California and Washington.
According to a blog post at Mashvisor.com, a real estate analytics company, “the spring season is usually a hot time for real estate activity across the country. This spring, however, the coronavirus changed the real estate business as we know it. Seeing that many people [had] lost their jobs and/or [were] furloughed, in addition to the fact that people across the nation [were] in quarantine and staying home to limit the spread of the coronavirus, the idea of selling or buying a property could be far from their mind.”
The state’s housing market started to feel the impact of COVID-19 with a slowdown.
“Homebuyers were fearful of the economic climate and it became commonplace for them to suspend their property search until the health crisis was over. Furthermore, social distancing raised concerns from home sellers worried about welcoming outsiders into their homes. Sellers [had] to face the suddenly shifting New Jersey real estate market trends and many [were] saying ‘I don’t think I want buyers in my home.’”
In addition to economics, people were fearful for their health, further slowing the market.
According to the blog post, “although sellers feared that they would soon see home prices dropping, many pulled listings or postponed sales for fear of having anyone enter their homes for sale.”
Not only did the local scene revive but it actually thrived, turning into a seller’s market as demand was high and supply was low.
By the end of May, home sales were on the rise across the state and, in many cases, exceeded those during the same time the previous year (+33.8 percent), according to the post.
Wilkins said Goldcoast sold 1,026 properties in Ocean City in 2019 with an average price point of $666,000 but sold 1,105 properties as of Nov. 30 with an average price point of $707,000.
As the state began easing or lifting restrictions on gatherings, retail and entertainment businesses, the number of listings “continued to climb in June 2020 from the severe drop suffered in April.”
Booth said the year started out great for local real estate professionals. He said the shore town’s trend see sales and rentals start to escalate just as the new year is dawning.
“Right after the holidays it picks up, but we get really busy say January, February, March,” Booth said, noting “the first couple of months were tremendous. We had a phenomenal January and February.”
Unfortunately for the burgeoning market, the coronavirus pandemic brought that early success to a screeching halt.
“When COVID came and the shutdown, we went down to nothing,” Booth said, noting that they sold what they had but were not getting new listings.
He said everything was working against the market.
“Offices were closed for the most part, people weren’t leaving, they were locked down in Pennsylvania, they were locked down at home. There just wanted the activity in the marketplace and people were concerned – What’s happening with this? How long is it going to last? What’s it going to do with the economy? What’s going to happen with all of the layoffs and so forth? So we pretty much dropped down to a very, very slow pace,” Booth said.
He said uncertainty at multiple levels and state restrictions hampered sales and rentals.
“The governor had us shut down; people couldn’t occupy a property — they couldn’t take occupancy of a property in April and May for rentals,” Booth said. “Being the fact that you couldn’t take occupancy and nobody knew how long that was going to last — Does that go into June? Does that carry into summer? Nobody knew. — The uncertainty in the marketplace pretty much put everything on hold and we had a number of cancellations in the rentals over the same time period.”
He said the second quarter “wasn’t going forward it was going backwards. We were losing rentals in terms of cancellations and we weren’t booking new ones, nor putting together the sales because people were locked down.”
Uncertainty led to fears — later learned to be unfounded — that the market would collapse.
“As we came into June, nobody knew what to expect. Nobody knew if we were going to come back to below last year’s numbers, in terms of month to month. Were people going to be cautious? Were they not going to buy, not going to rent? What was going to happen? And we found just the opposite. The interest down here exploded both in rental and sales,” Booth said.
“Certainly interest rates play into it but there’s more to it. People were locked down in their homes for months and they wanted to get out, they wanted to enjoy their families and they could come down to the shore. There’s people who decided they really did want a second home. If I am quarantined at home and had a place down here, maybe I would have come down here to it,” he said, adding that people responded in a very positive way.
Amid trying times, people often embrace what they know and love, what’s familiar, and spending summer at the shore provided that comfort. So despite virtually all of the events sponsored by the city and others being canceled, many still flocked to the shore.
“People come down and enjoy the events, such as Night in Venice, but they come here for the beach, they come here for the boardwalk, they come here for the water, they come here to fish, and they could still do that, albeit a little bit tempered,” Booth said.
Wilkins agreed.
“Going into COVID, in the beginning we kind of shut down and didn’t really know what to expect and have had a record-breaking year,” she said, attributing that to a lack of inventory, interest rates being at an all-time low and people deciding life is short and moving into the house of their dreams.
“People are staying home more so they want the kitchen that they’ve always dreamed of, the back yard that they’ve allows dreamed of. They want the house at the beach that maybe they have put off buying but realized that life is short and with COVID realizing that home is where everyone is spending most of their time.”
Booth said no one expected the market to thrive as it has.
“It’s incredible the number of sales that have happened in the June-through-November time period. We didn’t get back all the way what we lost in those couple of months because they were huge rental months for us, but the summer rentals were phenomenal in terms of people coming down and booking anyway.”
Booth said the incredible upswing continued through summer and into the fall.
“The only thing that has slowed down — and it’s only slowed a little bit because it’s still way ahead of last year — is the seasonality of the Christmas season where we slow down say Thanksgiving through New Year’s. But ‘slow down’ is relative and we are way ahead of what we were doing the same time last year, so it really hasn’t slowed at all,” he said.
“The majority of the buying public is the same buying public that’s always bought here — the Philadelphia marketplace, families looking to come down and have a place for themselves in the summer. It’s the same people and same demographic that’s always bought here, it’s just more of them,” he said. “There was talk and theories that this could occur but I don’t think anyone expected it to occur in the numbers and percentages that it has.”
The market is still as hot as ever. Booth said the inventory is running about a third of what it normally is in terms of active listings, “yet we sold more properties than we did last year because they come in and just turn around. As soon as they come in they go out.”
Secondary home markets thrive
Wilkins said the pandemic forced many people to rethink their priorities.
“What we are seeing across the globe is that a lot of secondary resort markets are seeing a huge influx because people realize if they can work remotely and work virtually they don’t have to be in the city anymore,” Wilkins said. “We are seeing people just really wanting to be in the house of their dreams. They want to have more space and they want to be out of the city and are looking for more lifestyle-associated properties like a mountain home or beach home.”
She said if there is an upside to the pandemic, it’s that people are staying at their shore homes longer.
“It’s unbelievable how many people are having children go to school virtually and are working remotely and able to stay at their beach home either year-round or at least spending more time there,” she said, noting that not only are sales doing well but people with investment properties are seeing success.”
“We’ve seen rentals in October and November. It will be interesting now that the weather is getting colder to see if that continues,” Wilkins said.