LBI Market Updates
LBI Update #2 – July 2021
MID YEAR UPDATE
Average Sales Price continues to rise and has hit a record high of $1,521,875. This is a nearly 30% increase over the same time period of last year. Days on market have decreased to an average of 57 days which is about half the time of a year ago. The List Price % to Sales Price sits at 100%. Showing just how many homes are obtaining sales prices above asking. Yes, it is a very hot market right now.
We know that real estate is generally cyclical. LBI has shown that the ups and downs are more tempered than many other areas. But ups and downs always occur. No market can keep up this pace. We are now seeing an increase in available inventory for sale. As of 7/17/21 there are 96 single family homes for sale. This is compared to 62 single family homes for sale on 4/23/21.
Our local MLS recently released some stats that showed buyer demand is ebbing somewhat. This is based on traffic on real estate sites that our MLS controls which covers, Virginia, Delaware, Pennsylvania and New Jersey.
It also appears that some tax law changes are gaining traction. (See Below) and in NJ there has been a bill introduced that supports going back to taxing summer rentals.
3rd Quarter should continue to show strength and most likely well into the 4th Quarter. Determining factors will be how much inventory comes on the market and how the Fall shakes out with COVID surges or not. COVID rates are beginning to rise and vaccination rates are not keeping pace with earlier this summer.
Some slowdown may come in the beginning of 2022.
LBI Update #1 – May 2021
HOW LONG WILL THIS MARKET LAST?
What we do know is that 2020 was an amazing year for the LBI real estate market. When news of COVID first hit and we were told to ‘shelter in place’ most real estate activity stopped dead in its tracks. We mostly fielded calls from renters that wanted to cancel their summer vacation and more than a few sales contracts were withdrawn. But by May, one year ago, a complete turnaround happened. Visitors and 2nd homeowners were flocking to the beaches as LBI and other more remote areas were considered safer. Where would it be better if working from home — than a home at the beach.
A whirlwind year has come and gone, and now by the end of the first quarter of 2021 the activity continues. Average Sales Price has increased over 25% since the beginning of 2020.
The Big Question Remains: How Long Will This Market Last?
According to Google, one of the most searched phrases the first week of April was “when is the housing market going to crash”. Should we be wary? Somewhat, according to most articles. There are several factors to consider and how the up (and perhaps the eventual down) is felt.
One factor may depend on your property’s location, how desirable has this location become to the COVID driven purchaser. We know LBI ranks high on this parameter.
The length of time the pandemic affects a buyer’s life style will have an impact. We are moving in the right direction for more freedom of movement and ‘going back to the office,’ but we aren’t completely there yet.
Two other issues will be the level of inventory and how quickly mortgage interest rates begin to rise. It is anticipated by year end that mortgage rates will be around 3.5%, almost a point higher than the beginning of the year. One point increase generally does not affect the LBI market. Given the tight inventory levels on LBI – as of 4/23/21 there were 62 single family homes for sale, which is an incredibly low number, demand is not keeping up with supply
Therefore, buyer demand will most likely remain strong through the 3rd Quarter of 2021.
Will we continue to see the surges of the past few months, probably not. The market is slowing down a bit, some due to lack of inventory, but also because prices have climbed so high so fast. This may cause some buyers to take a pause.
There are also some new tax laws being bantered about in Washington, DC. The areas to watch are:
- Raising of the top tax rate from 37% to 39.6% for individuals
- Raising capital gains taxes for those earning more than $1M to 39.6% from the current 20%. This could go as high as 43.4% with the 3.8% surtax to fund Medicare Expansion
- 1031 Tax Deferred Exchanges may also be severely reduced with the program being eliminated for earners with income over $400,000.
These changes affect the most upper reaches of our market, however, even if most are not affected, these changes would have some impact on an LBI real estate purchase if enacted. Much of this has been spoken about for years and little change happened. There will be push back in Congress and the Senate. This is an area to watch closely as a significant change in taxation to the upper levels of taxpayer will likely lead to less incentive for real estate and securities.
On the plus side, inflation most likely is coming and real estate is a good protector against inflation.
As new information becomes available, I will continue to issue updates on this page. You also may wish to sign up for my LBI MarkeTrends Newsletter, which gives a more in-depth overview of the LBI real estate market. Next issue will be out July 2021.
If you have specific questions, I would be happy to discuss them with you or if beyond my scope, point you in the right direction. You can reach me at: PatonLBI@att.net or my cell at 609-290-5360
Pat Sepanak, Broker/Owner
Sand Dollar Real Estate
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Online Market Evaluation – Determine the price range of value of your beach house with this all inclusive report.
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