She couldn't have bought at a worse time! She bought at the top of the biggest RE Bubble in history. It is much worse than any other bubble because we had sub-prime loans, practices that were unconscionable, and a huge new increase in supply there. She will not see that condo appreciate for AT LEAST 10 years, maybe more.
Sorry for the bad news, but you are going to lose a lot if you sell anytime soon. Rents are also going to drop because of increased rental supply. It is going to get really worse in the coming years because of all the ARMs that are resetting and people will need to sell.
This is simple supply and demand. It doesn't matter what a couple Agents tell you, they make their money if you buy or sell. Do your research: After the money's gone by Paul Krugman in the NY Times.
Also if you sell, interview your next RE Agent well. If they tell you what these two did, move on to the next one.
You have a good point that the growth in Atlantic City may not help Ocean City at all. I'm optimistic that it will help some. However, I do believe that the future growth of Atlantic City will help Atlantic County where most of the people who work in Atlantic City live and home prices are more affordable.
I'm not sure what your purpose was to buy in Ocean City but if it was for appreciation I believe you won't loose money in the long run.
Now is a good time to buy in Atlantic County and the Atlantic City area if you plan on keeping the home for the next three to five years. There are three new Casino projects planned that will produce roughly 24,000 jobs three years from now. This should increase the demand greatly causing appreciation. This demand will be more for the homes on the mainland (Atlantic County) area but I think the demand will also spill over into Ocean City.
So hang in there for at least three to five years and you shouldn't loose any money. Best wishes, Matt
P.S. We have a free Market Snapshot service to keep an eye on what trends and prices are doing in Ocean City and other areas of Atlantic County. You can sign up at http://www.HavilandGroup.net in the Market Snapshot form.
If you bought it for personal pleasure, just enjoy it. Great place!
If you bought it as a rental / investment, look at the math.
Math assuming you did 20% down:
$1200/mo taxes, util, hoa, insur ect
Average rent $1700/wk for 12 weeks.
You have a negative cash flow of $1841 x 12 = $22, 092 per year
Rent it 24 weeks (somehow?), still in the red. by over $1100/mo.
I stand corrected, I see 753 condos for sale. There were 12 sold the week of oct 18th (I picked it as a random week from the Herald). The inventory usually grows in the Spring. That is still a 62 week inventory. That is really high. I am not saying not to buy, just buy smart. You make money when you buy, not when you sell.
If your purchasing strategy was to hold onto the property for 5, 7, 10 years or more, the strategy should be sound ... and what better place to own a resort home than Ocean City - Paying $520,000 for a 3 bedroom, 2 bath condo, and being just one block from the beach places you in a Desirable location at a price that's affordable to a large segment of Ocean City buyers, even today !
We DON'T have 1,921 condos for sale - more like 733 (as of today) .... and the number of sales reported by the South Jersey Shore MLS for 2007 exceeds the number of 2006 sales. It's not at the levels we saw in 2002-2004, but those were extremely abnormal years. Eventually we'll settle back into the days of 7% appreciation per year like we used to see .... although theres' still some adjusting necessary in pockets of price ranges and inventory ( higher priced where supply WELL exceeds demand).
Rental demand remains as high today as it has over the past 3 years, and it'll stay strong considering the popularity of Ocean City, NJ for it's beaches, boardwalk, and family atmosphere (no bars on the island).
Make sure that if you're offering your condo for rent that you keep it clean and include amenities that set you aside from the competition - wireless internet, board games, tvs in every bedroom, even a Play Station or XBox for those "rare" rainy days.
Keep it mind what Harvey McKay said "A Dream is a Bargain, No Matter the Price", then sit back, enjoy, and let the memories build.
I really hope the new casinos help. I like that area and would like to see it do well. What I really like is affordable housing that people can really afford. That hasn't been the case these last few years. I welcome the changes that get us back to historic prices.
I agree AC will benefit from the casinos, but that will likely only help AC. OC is a resort town and casino jobs are not going to create buyers who can afford a $400k condo. Buyers from 2001-2006 might not see these prices again for 10-20 years. They were so over inflated and over built there just aren't enough people that qualify anymore. 3-5 years to see these prices again? We might not even be at the bottom then.
1961 Condos for sale in OC NJ currently. There is an average of 12 -18 condos a week sold. There are still more new condos hitting the market as the builders finish their inventory that was started. There will be numerous foreclosures and sellers looking to get rid of their ARM loans hitting the market this Spring. Add to it that will be much harder to get a loan in the coming years (rightfully so) and you have a perfect storm.
No one has the crystal ball for the future.
But if history can give us any guidance, overall real estate appreciates.
You have wisely bought in a down market, which is to your advantage!
As time progresses (unless california falls into the ocean and Nevada becomes the new ocean front) You will surely notice equity position in your purchase
Best of luck
It's a great time to buy - and it's a great time to own. No worries.