Housing boom a bust for Shore populations

OCEAN CITY, N.J. - It was 2004 when Lorraine McCarthy, a full-time resident of this Cape May County resort, sold her duplex a block from the boardwalk and decamped to the mainland.

"The choice we made to move off the barrier island was the same choice that a lot of people who wanted to make some money made," said McCarthy, who lives in nearby Upper Township. "It was the best time to sell."

The Jersey Shore's real estate boom, it now seems, had a more profound effect on the region's population than many realized.

In beach towns up and down the coast, the number of year-round residents dropped significantly last decade - almost 40 percent in one case, according to recently released U.S. Census statistics that surprised and alarmed some local officials.

"I knew our population numbers were going to be down, but I didn't know they were going to be down this much," said Suzanne Walters, who has noticed the voter rolls shrinking during her 15 years as mayor of Stone Harbor. The little borough's population declined 23 percent between 2000 and 2010.

The robust economy during most of the decade led to a fevered real estate climate, said James Hughes, dean of Rutgers University's Bloustein School of Planning and Public Policy.

"A lot of year-around residents at the Shore saw their property values surge, so they took advantage of the market," Hughes said. Many migrated inland or left the state after their modest year-around dwellings were purchased - and sometimes replaced with larger homes - by people who live elsewhere.

Others, mostly retirees, held on to their properties and still vanished from local census roles, Hughes said, by acquiring winter residences in other states that they declared as their primary residences.

Their motivation: refuge from the Garden State's notoriously high cost of living.

New Jersey residents pay up to 12.2 percent of their income in state and local taxes, the highest rate in the United States, according to a study released last month by the Tax Foundation, a research group in Washington.

Other expenses, such as utilities and car insurance, also are among the nation's highest, according to Kiplinger, the personal-finance organization, which lists New Jersey among its top 10 "tax hells" for retirees.

The exodus of year-rounders has not affected municipalities' property-tax revenue. An owner pays the same levy whether his home is a primary or secondary residence, according to the state Department of Community Affairs.

Population does not figure into municipal aid calculations, a DCA spokeswoman said. Nor does it play a role in what little federal aid Shore towns receive - mostly for disaster relief and beach replenishment, Walters said.

Yet the declining number of residents has repercussions.

"We like to think of [Stone Harbor] as a thriving, year-around community," Walters said, "so as the population dwindles and you start seeing the twenty- and thirtysomethings leaving, you worry that what you have left is only an older population. That can make for a less well-rounded community."

She said she was concerned about the difficulty of maintaining year-round business for merchants and a possible shortage of residents to take over volunteer services.

"We're lucky that we have many younger people who are in town to work during the day that have joined our volunteer Fire Department and our ambulance service. Many of them are willing to come out on the night calls, too," Walters said. "If we ever had to go to paid fire and ambulance, we would definitely see that affecting municipal costs and taxes."

Having fewer residents also affects schools. In Sea Isle City, where the full-time population shrank 25 percent last decade, the Board of Education has asked the state to order its school district and neighboring Ocean City's to merge.

Only 47 students - in kindergarten through third grade - attend Sea Isle's public school. Fourth through eighth graders began going to school in Ocean City three years ago because of Sea Isle's shrinking enrollment.

With reduced funding based on fewer students, the district can no longer operate under the state budget cap, said Valerie Egnasko, the school board president.

McCarthy, 66, a hospital social worker, wasn't ready to retire when she listed her Ocean City property seven years ago, she said. She and her husband based their decision on value for their housing dollar. They sold their aging duplex on a postage-stamp-size lot on 15th Street to someone who tore it down to build vacation condos.

In Upper Township, a short jaunt over the 34th Street Bridge, the couple bought a newer, four-bedroom, ranch home on 21/2 acres complete with a two-car garage and inground pool. It cost about half the $825,000 they got for their old place.

Between 2000 and 2010, Ocean City's year-around population dropped about 24 percent to 11,701 residents. Among 10 Cape May County coastal locations, populations in nine declined, between less than 1 percent (Lower Township) and 38 percent (Avalon), according to the census. (Tiny Cape May Point gained 50 residents - an increase of 21 percent.) The towns' total population dropped about 12 percent.

In Atlantic County, the combined population of Atlantic City, Brigantine, Longport, Margate, and Ventnor dropped about 11 percent to 66,907 during the decade. The greatest losses were in Brigantine (25 percent) and Margate (22 percent).

Meanwhile, the county's mainland municipality of Egg Harbor Township experienced the second-highest population growth in the state. Galloway and Hamilton, both inland, also were among the top 25 gainers.

A 9 percent overall decline in year-round population was seen in Ocean County's 13 beach towns, with the most significant drops - 30 percent - in Lavallette, Mantoloking, and Seaside Park. The towns' combined year-around populations in 2010 was 183,340.

"Everything goes in cycles, and the cycle we're in right now has a lot of people who once lived here year-round living over on the mainland," said Nick Marotta, a broker and sales agent at Academy Real Estate in Ocean City.

The market remains "very strong" in sales of homes to buyers whose primary residences are elsewhere, said Marotta, who also is president of the local Board of Realtors. In the last decade, he said, he has seen many retirees sell their "nest egg" home at the Shore and move to lower-cost, age-restricted communities on the mainland.

"People just cashed out," said Walters, of Stone Harbor, which had 866 residents last year, according to the census.

"I know a lot of people, longtime residents, that sold and moved over to Cape May Court House on the mainland and used the money to buy a bigger home or pay for their kid's college education. And a lot of retirees permanently moved to Florida or the Carolinas, where they found the cost of living to be cheaper," she said.

"A lot of people talk about what we can do to lower taxes and costs and to keep our residents from fleeing the state. Maybe this will be a wake-up call that we need to stop talking and do something about it."