Posted: Sunday, March 16, 2014, 1:09 AM
For those who have delayed buying a Jersey Shore vacation house for any reason - maybe an allergic reaction to Dodd-Frank mortgage reform, or post-Sandy confusion compounded by flood-insurance phobia - the experts' counsel is this:
"Sandy is past news," said Marge Swanson, a mortgage consultant with Trident Mortgage in Ocean City. "The lenders are lending. It's kind of behind us."
Said Cheryl Huber, an agent with Berkshire Hathaway Home Services Fox & Roach in Ocean City: "Most people have decided that life is too short."
Maybe not most, but certainly many. New houses are going up, market observers here say, and previously owned houses are moving, with bidding wars in some towns because for-sale inventory is limited.
A condo in Diamond Beach, already under contract for the full price of $799,900, went into a bidding war with multiple offers, said Robert Snyder, an agent with Weichert Coastal who sells in one of the two most popular Jersey coast zip codes, the Wildwoods.
"You see that with people who are trying to move up," Snyder said, adding that there are not a lot of listings.
In the other most popular zip code, which includes Ocean City, 259 building permits were issued for 2013, up from 152 in 2012.
And in tiny Longport, all 1.6 square miles of it, there were 27 new permits, said Suzy Lawler, an agent with Long & Foster. It may not sound like much, but considering that five out of 10 houses occupy about 4,000 square feet each, they cover a lot of real estate.
All this is not to say Hurricane Sandy is just a memory - it's anything but. Those new houses, if they are in flood plains, must adhere to new federal rules Buy Cheap elevation, which can require that structures be at least 12 feet above base. And those flood-insurance prices will be elevating, too. But with the U.S. House's move earlier this month to ensure that annual premiums not rise more than 18 percent, vacation-home buyers will get something of a break - if President Obama signs the legislation. (The Senate passed the measure in late January.)
House hunters are doing "more due diligence, just to see if there was water damage," said Snyder. And they are asking about elevations, Huber said.
"Buyers are smarter. They know what they are getting into. They want a Shore home," said Rick Butera, a branch manager for HomeBridge Financial in Bayville, Ocean County. "Before, values were escalating, but Sandy put a damper on it."
Whatever obstacles a would-be buyer - one who can afford another mortgage - thinks might exist between second-home dream and sand-dune reality are scalable, market observers said. But that buyer will need patience, cash, and a good credit score, because cheap VA or Federal Housing Administration mortgages are not available for traditional vacation homes.
You have to prove you can afford the second home, Butera said - that's what the Dodd-Frank reform is all about.
"It's cumbersome, but you can get through it," he said. And different lenders require different amounts on down payments.
Consumers have noticed, said Chace Gundlach, mortgage-banking regional sales manager for Citizens Bank. "They say, 'It's not as easy to get a loan. It's not just one assets statement; it's a couple of years' worth of W-2s.' "
Which, apparently, is why so many people are paying cash for their vacation homes: They don't want the bother.
"Out of 10 buyers, maybe five are paying cash," Lawler said, "even before Dodd-Frank." Butera said he is seeing the same on Long Beach Island, as is Gundlach at Citizens' Avalon branch.
The latest U.S. trend data from the National Association of Realtors, from 2012, showed 46 percent of all vacation homes (purchased primarily for personal or family use, rather than for investment) were paid for with cash.
Where does that leave buyers whose lexicon doesn't include the words liquid assets?
Crawl before you walk, Butera advised: "Get something that makes sense. Trade up in a few years."
That something might be a foreclosed property. Opportunities exist, said Gundlach, but the process can be exhausting: Prior owners can get nasty, ripping out bathrooms and kitchens, making the property unlivable.
A property like that needs to be fixed before you can make settlement. If the lender has assumed control, it could be a minimum of six months before it can be purchased.
But in the end, for a house at the beach, it may very well be worth it.