Second-home sales declined in 2008

The deepening recession took a big bite out of second-home sales in 2008, the National Association of Realtors reported yesterday.

The economic downturn hit the vacation-home market hardest, with sales down 30.8 percent, to 512,000 units from 740,000 in 2007. These homes are typically for the personal use of the buyers.

Investors, however, make up a larger share of the second-home market, and that segment also experienced a drop - down 17.2 percent, to 1.12 million in 2008 from 1.35 million in 2007.

Propelled by speculation and cheap mortgage money, the U.S. second-home market peaked in 2006, with 3.34 million houses sold. At the Jersey Shore, investors accounted for 80 percent of all second homes purchased that year, said Mark Zandi, chief economist of Moody's Economy.com in West Chester.

The median vacation-home price was $150,000 in 2008, down 23.1 percent from $195,000 in 2007. The typical investment property cost $108,000, 28 percent below the 2007 median, $150,000.

Declines in both categories show that foreclosures in the second-home market are affecting prices, said Lawrence Yun, chief economist for the Realtors' association.

Forty percent of investors and 30 percent of vacation-home buyers are paying cash in an effort to diversify portfolios, the Realtors' group said.

In the vacation-home market, that's helped keep high-end sales moving - closings on five $1 million-plus properties were recorded through mid-February in the seaside towns of Cape May County.

In Avalon, where there were 101 single-family sales in 2008 compared with 99 in 2007, the median price was only slightly lower last year than in the previous year - $1,690,000 compared to $1,795,000, according to data provided by R.J. Soens of Avalon Real Estate Agency.

At the lower end of the market, though, the pinch is being felt, as lenders tighten rules and private mortgage-insurance companies are increasingly unwilling to be involved in second-home sales.

"It is possible to get a mortgage to buy a vacation home at the Shore," said Philadelphia broker Fred Glick, "but the borrower has to [have] a larger down payment, great credit and provable income.

"You also have to stay away from condo developments in which investors own 25 percent of units, or in which 10 percent of the units [are] owned by one person or entity," he said.

The reason: If the investor-owners default, remaining condo owners must assume a larger share of maintenance and other costs.

To move houses, developers are turning to auctions, such as the one Bayshore Group L.L.C. - builder of Harbor Cove Condominiums, an eight-unit development on Montgomery Avenue in Wildwood - plans.

Seven of the three-bedroom, two-bath units will be on the block at 1 p.m. on April 25 at Avalon Golf Club in Cape May Courthouse, said Bob Dann, vice president of Max Spann Real Estate & Auction Co. of Clinton, N.J.

The units were originally priced at $575,000. The minimum bid will be $75,000. Previews of the properties will begin Saturday.

The first open house "is always a good indicator of the level of interest," Dann said.

Spann has had good luck at the Shore. At a May auction, Beazer Homes USA Inc. sold 26 of 40 remaining condos at its 60-unit Pointe at Moore's Inlet in North Wildwood.

One thousand people turned out, and 186 bidders registered. Beazer waited for the deals to clear, then let the unsuccessful bidders try for the remaining 14 homes.

The last unit closed Sept. 5.

How: Register by fax or at open houses at Harbor Cove Condominiums in Wildwood.

In-person registration: Noon to 2 p.m. Saturday and April 11, and April 18 at 429 W. Montgomery Ave., Wildwood.

Auction: At 1 p.m. April 25 at the Avalon Golf Club, 1510 Route 9 North, Cape May Court House.

Registration details: Available at www.maxspann.com, 888-299-1438.

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