If you have the money - and that means cash - you can buy your dream house at the Jersey Shore. If you don't, as a prospective vacation-home owner you're being squeezed even harder by the same financial institutions that tightened credit for purchases of primary residences.
The higher the price, "the greater the likelihood the buyer is paying cash for the property," said Paul Leiser of Avalon Realty. "A $7 million sale is far more likely to be a cash deal than a $1 million sale."
Like many places these days, Avalon, long a seaside favorite of the well-to-do, isn't seeing a a lot of home sales, period. But those that have occurred have been high enough in value to push the median price up 321 percent since 2005, an Econsult Corp. analysis of transactions in 13 Shore zip codes in Atlantic and Cape May Counties from April 1, 2005, through June 30, 2011, shows.
In comparison, the median price in high-end Stone Harbor is up a modest 87 percent, according to the analysis, conducted by Econsult vice president Kevin Gillen along with a broad examination of home prices in the eight-county Philadelphia region based on 376,257 sales in that period.
(Median is the middle number: Half the houses sold for more, half for less.)
Many Shore points that are traditional vacation destinations for Philadelphia-area residents did not fare all that badly in the housing downturn, the analysis showed, with one caveat:
Though almost all the communities retained the value they had in 2005, Stone Harbor alone consistently held on to median-price gains - from 2005 through 2007, when the U.S. housing bubble burst, then through to June 30 of this year.
Avalon, for example, saw its median price rise 437 percent between 2005 and 2007, then ebb 22 percent by June 30.
Longport's median price rose 16 percent from 2005 to 2007, then fell 21 percent from 2007 to second quarter 2011, for a loss of 9 percent over the full analysis period.
A lot of developers and marginal buyers had banked on price appreciation in Wildwood zip code 08260, which also includes North Wildwood and Wildwood Crest. But the median price there rose just 2 percent from 2005 to 2007 - from $330,000 to $334,975 - then fell 34 percent from 2007 to second-quarter 2011, ending up at $222,375, just a third what it was at the start of the period covered by the analysis.
Many Wildwood developers were forced to abandon projects. Others brought in auction companies to try to reset the market and sell enough condos to stay ahead of foreclosure actions.
Sea Isle City, on the other hand, saw its median home price rise 27 percent from 2005 to 2007, then fall 9 percent from 2007 to second-quarter 2011. But at $571,250, it was still 15 percent higher than in 2005.
Atlantic City, heavily dependent on the now-flagging casino industry, saw its median price begin a precipitous decline in 2005, as prices just about everywhere else were performing spectacularly.
By second quarter 2011, the median price had lost 53 percent of its 2005 value, plummeting from $269,000 to $125,000.
"Atlantic City house prices have taken such a huge hit relative to other Shore communities because it is the only one with a significant concentration of low-income and working-class households - who have been hit very hard by the economic contraction and reduction in casino employment - in addition to vacation homes being especially hard hit by an economic downturn," Gillen said.
"A real double-whammy."
Tom Scannapieco, president of Scannapieco Development Corp., which owns the Bella condominium project there, noted: "The housing market in Atlantic City was poised to take off as developers lined up potential new projects in 2005 and 2006, but the economic slowdown made housing developers abandon plans for expansion in 2007.
"The years 2008, 2009 and 2010 saw significant price reductions in second-home markets across the country, and Atlantic City was no exception," he said.
He believes, however, that Atlantic City has only a few hundred units of excess second-home inventory, and that values can respond more quickly to positive change than in such oversupplied areas as Florida.
Indeed, what happened to Shore prices reflects what occurred nationwide over the last six years. The second-home market has taken a hit from New Jersey to Florida to California to Maine.
Although conditions vary substantially, the U.S. second-home market "is at bottom," said Mark Zandi, chief economist at Moody's Analytics in West Chester.
"I don't expect second-home sales and prices to improve much in the next year - the market will remain at bottom - but I do expect the second-home market to be a strong market over the next five to 10 years," Zandi said. "There is a strong demographic tailwind behind the market, given the aging of the large baby-boom generation into their 50s and 60s, when second-home buying is strongest."
Around Atlantic City, Longport, primarily a second-home market, sustained a loss for the period analyzed.
Yet two Atlantic City bedroom communities - Brigantine and Margate - didn't take as big a hit as might have been expected, even though the casinos shed thousands of employees who lived in those towns as the tanking economy and competition from other states took a toll.
Brigantine's second-quarter 2011 median price, $292,250, is just 1 percent below what it was in 2005, though those who bought at the height of the market - when prices were 36 percent higher than in 2005 - saw values tumble 28 percent.
Margate's median as of June 30, $393,150, was 12 percent lower than 2005 and 20 percent - more than $100,000 - below the 2007 median price of $491,250.
Bottom line: Longtime Shore homeowners came through the housing bust better than those who bought during the boom.
Veteran Realtor John Duffy owns a second home in Ocean City and is familiar with those from his Main Line market who buy at the Shore. He said it was his "understanding that many younger buyers took out five- to seven-year interest-only loans, so they are now coming due, and with the lack of appreciation, and depreciation in some cases, they could find themselves underwater," owing more on their mortgages than the houses are now worth.
Between 2007 and 2010, there were 10,527 foreclosure filings in Atlantic County, with lenders taking back 1,236 homes, according to RealtyTrac Inc., of Irvine, Calif., which tracks the activity. For the same period in Cape May County, there were 4,665 filings and 580 lender repossessions.
Rather than fret about price fluctuations year-to-year, Shore homeowner Alex Cerrato of Haddonfield is looking at things over the long term - which is the advice most real estate agents give these days, as well.
He and his wife, Beth, bought a three-bedroom house in Ocean City in 2007, after waiting for prices to drop. But as better bargains began popping up, they sold that property for a $5,000 profit in 2008 and bought a four-bedroom house closer to the beach.
"We aren't flippers," Cerrato said. "This is the place we bring our boys and our families to gather for good times."
Contact real estate writer Alan J. Heavens at 215-854-2472, email@example.com or @alheavens at Twitter.