Catch a wave Beachfront prices are low — but not for long

For buyers with money to spend, this is a good time to invest in residential beach properties, say real estate agents in Maryland’s Ocean City and coastal communities in Delaware, Virginia, New Jersey, North Carolina and South Carolina. Good properties are available at good prices — the best in years, agents say — and bargains abound. But maybe not for long.

While the February weather put a temporary freeze on transactions, beach home sales already are up considerably compared to this time last year as the market begins to rebound from the recession. With plenty of inventory and interest rates low, it is a buyers’ market, agents agree.

“It’s a helluva good time to buy investment property; no question about that,” declares Gregg Holland, president of Maryland’s Coastal Association of Realtors and a consultant with Coldwell Banker Residential Brokerage in Ocean City. Prices on condominiums are down about 40 percent — “back to the 2003-2004 level before the boom hit,” Holland says. Some oceanfront properties that had been in the $550,000 range are down to $350,000-$400,000, he says.

But Holland cautions buyers against waiting too long. “There are people who have money who are waiting for prices to hit the bottom, but if they wait too long, prices will already be headed back up,” he says. “If you have cash and you’ve been wanting to buy a beach property as a second home, the prices have not been better since 2004.”

“We can see the light at the end of the tunnel,” adds Patricia Terrill, secretary of the Maryland Association of Realtors and an agent with Prudential Carruthers Realtors in Ocean City. She advises wait-and-see buyers to buy now, “before we get to the end of the tunnel and the prices go up again.”

It’s the same in Virginia Beach, where prices at the north end of the community are down about 30 percent from two years ago, says Charlee Gowin of Prudential Town Realty and the immediate past chair of the Hampton Roads Realtors Association. The north end is probably the hottest part of Virginia Beach because “there is a lot more inventory and a lot of it has been on the market for quite a while,” Gowin says.

“I won’t say there are any huge deals to be made,” he continues. “You’re still not going to get on the north end for under $450,000-$500,000, so they are not fire-sale prices. But they have started to come down to where they were before they skyrocketed in the 2003-’04-’05 market.”

In Delaware, inventory has shrunk in the last year but “there’s still a fine selection available in all prices ranges” in the Bethany Beach area, reports Sandy Greene, an associate broker with SeaCoast Realty in that community. “Builders would really like to move some of their inventory, and people who bought at the peak of the market and have mortgages that are adjusting are ready to unload some things. So there are investor properties out there. Anything a couple of miles off the beach is where to look, because there are bargains.”

Greene continues: An “unfortunate fact of the market” is that some short sales are available. “If you have the time and patience and strong intestinal fortitude to go through that process, those are pretty good and can be very profitable,” she says.

Good inventory at good prices can also be found in the Lewes-Rehoboth Beach area, adds Andrew Ratner, president of Prudential Gallo Realtors in Lewes. Mortgage rates are are still good, but he emphasizes that buyers “need to be strong with down payments as far as financing goes.”

Don Harris, a broker associate with Century 21 Brock & Associates in Wilmington, N.C., agrees that the size of the down payment is important. “Without a substantial down payment on a beach property, it’s not necessarily going to be a good investment in the way of cash flow,” he says.

Stephanie Walker, in the Kill Devil Hills office of Sun Realty and president-elect of the North Carolina Association of Realtors, reports that January sales in her office this year were double what they were a year ago. “It’s a real good time for someone to enter this market,” she says.

The pick-up in the beach market that began last fall in New Jersey continues, with “multiple properties in contract for this early in the year,” says Judy Appleby of Appelby Realty in Seaside Park and president of the New Jersey Association of Realtors. “It’s not going bonkers, but it’s a slow, steady market, which is great,” she says.

“I think the mind-set of people is more positive this year than it was last year, when the banks were in trouble, the car industry was going to pot — people were nervous wrecks. This year, they seem to have settled down, figuring that if they haven’t lost their jobs yet, they’re probably OK,” Appleby says.

Cash buyers are starting to show up in South Carolina, says Alex Holbert, president of the Coastal Carolina Association of Realtors and an agent with ReMax Town and Country in Myrtle Beach. “People are making multiple offers on some properties and that is a great sign to me that things are starting to turn around [and that] consumer confidence is improving,” he says.

Two-bedroom, two-bath condos within walking distance of the beach are top sellers. And after oceanfront and ocean-view properties, golf course communities are the most popular, Holbert says. “We have a ton of those.”

Holbert notes that because of high unemployment in South Carolina, second-home sales to local people are not common. Investors come mainly from farther north and from Pennsylvania and Ohio, he says.

Like his colleagues, Holbert encourages buyers who are waiting for the market to bottom out to not wait too long. “They say: ‘Hey, I don’t think it’s hit bottom. I might save another $10,000 if I wait a little bit.’ But when the market recovers, it will be amazingly fast,” he says.

Continues Holbert: “Pretty soon the cycle will change, with prices inflating and interest rates going up. It will swing back toward a sellers’ market. I think it’s only a matter of time before the market snaps back.”