Long Beach Island New Jersey Real Estate | LBI NJ Real Estate | Nathan Colmer

Building a New Home on Long Beach Island NJ

Nathan Colmer | Van Dyk Group

C: 609.290.4293 | O: 609.492.1511

Building A New Home on Long Beach Island New Jersey

Building a new home is the best investment you can make in the Long Beach Island real estate market. When a piece of vacant land or a tear-down home is purchased for the right price and a home is built within budget, a buyer should realize immediate equity in the home. This can improve the rate of return on a summer rental, or the home could be sold for a profit in the LBI real estate market. Building a new home on Long Beach Island can lower the cost of your insurance, lessen the chance of flooding from storms, and be an excellent short and long-term investment.

 

Building A New Home | LBI Real Estate | Long Beach Island New Jersey

New Construction in the LBI NJ Real Estate Market

 

 

Building A New Home | LBI Real Estate | Long Beach Island New Jersey

Building new construction in the LBI NJ real estate market has several advantages over buying a ready-built home. While not for everyone, building a new home on Long Beach Island is surprisingly simple and time-tested. The basic process involves:

  • Finding the right vacant land or tear down (lot size, zoning, setbacks, etc all play a role)

  • Meeting with an architect and builder (your building team should be easy to work with and priced correctly for the LBI real estate market)

  • Working through the home's construction with the builder (this can be as easy or as hard as you want it to be. Some owners are very involved and others are very hands-off)

Below you will find details on the steps needed to build a new home on Long Beach Island.

Building A New Home | LBI Real Estate | Long Beach Island New Jersey

Building a New Home in the LBI Real Estate Market

Does Building a New Home in the LBI Real Estate Market Make Financial Sense?

As a buyer in the LBI real estate market, let’s assume you find a nice 50x80 lot on the oceanside in Long Beach Township. This lot will cost about $1,100,000-$1,500,000 in the current market and can accommodate a well-designed 2,200 sq. foot house with large decks. This house will cost about $900,000 to build (with a pool), making the total project cost about $2,000,000-$2,400,000.

Similar new construction oceanside homes will sell for about $2,500,000-$3,200,000, so it is easy to see how building a new home can create instant equity and appreciation in the LBI real estate market! New construction is the way to go if you are looking for value in the LBI real estate market!

New Construction in the Long Beach Island Real Estate Market

Building a new home on Long Beach Island offers many advantages over buying an existing house. New construction will allow you to design and customize the house to fit your needs. Building a new home will often see immediate equity, as the finished home should cost much less than buying a similar home in the market.

Building a house involves:

  • finding a suitable building location with the correct lot size and setbacks
  • planning the new build and knocking down the existing house
  • constructing the new dwelling under local codes in the LBI real estate market
  • The process takes about a year on average, from finding the lot to designing the new home and finishing construction.

Since few vacant lots are left on LBI, most new construction occurs by sourcing an older, obsolete home and demolishing it.

Building a new house in the LBI real estate market will typically take 8-9 months, plus the time it takes to design the home. From start to finish, the entire project should take about a year or so. While this is an investment in time, the advantages of building a new home are numerous. When the right lot is sourced, and the right home is built, there should be a roughly 20%-25% equity position in the project. To put that into practical terms, if you spend $2,000,000 on a project (for the purchase of land and building of the house), this new home should be worth around $2,500,000 in the current market. Designing and building your own home will also allow you to select the best features for you. This may include additional bedrooms and bathrooms, larger decks, or custom details that make it your own. There are many ways to finance new construction depending on the type of project and your personal financial situation. Many banks offer construction loans, some of which may be refinanced into permanent, fixed-rate loans. I can get you in touch with local lenders who offer these products. 

Lot Sizes and Locations When Building a New Home in the LBI Real Estate Market

The size of the lot and setbacks will determine how much can be built. Generally, anything smaller than 40' in width will require a variance from the town, but even these smaller lots can accommodate a well-designed and attractive home. That said, a wider lot usually allows for more flexibility in the new home's design. Throughout Long Beach Island, most side yard setbacks are 4' and 11' feet. This means a 40' lot would most allow a 25' wide house, and a 50' wide lot would allow for a 35' wide house. The extra 10' in a 50' lot allows for much more space and flexibility, something that is highlighted with wider lots. On Long Beach Island, most lots are between 75' and 100' deep. The depth of the lot is not as critical as the width, but depth is still very important. Many homeowners are looking for a pool to be incorporated into the home's design, so you need suitable lot depth. Ideally, it would be best to have a 75’-100' deep lot, as it makes it far easier to incorporate a pool into the build. It is best to have at least a 20-foot deep rear yard to accommodate a pool, but smaller lot depths can also manage a pool. 

The location of the building lot on Long Beach Island will determine the price and the home's future appreciation. Typically, oceanside, oceanblock, and oceanfront locations will hold their value better than bayside homes in the LBI real estate market, but they will also cost more to purchase. Regardless of the location, you want to ensure that you do not "over-improve" a lot. This can occur by spending too much on the new house relative to the home's future value.

The construction cost will depend on the house's size, the installed finishes, the design of the home, and the overall market conditions. Quality new construction should cost about $300-$350/ square foot, not including landscaping. This budget should allow for Anderson windows, hardwood floors, granite countertops, and other finishes typically seen in the LBI real estate market. The size of the house will also influence the final cost of the building project. For example, a 1,000 sq. foot ranch-style house will cost much more per square foot than a 2,000 sq. foot house. This is due to certain "fixed" costs such as plans, permits, and demolition increasing the price per square foot cost of a smaller home. There are a number of builders and finish packages on Long Beach Island, all of which price differently. I can connect you with local and trusted builders so you can better understand the cost of building a new home in the LBI real estate market. 

 

 

 

LBI Real Estate | Building a New Home in the Long Beach Island Real Estate Market

The COVID Building Boom


COVID had an immediate and long-lasting impact on the LBI real estate market. One of the most impacted areas of the Long Beach Island area was in the field of new construction. Fueled by both the strength of the LBI real estate market and the desire to live and work remotely, new construction saw a massive boom, one that rivaled or perhaps even overtook Hurricane Sandy! The long-term impact of this building boom is two-fold. First, fewer building sites are available now, and "newer" homes built in the late 1980's and 1990's have become the new knockdowns. Secondly, the intrinsic value of the LBI real estate market has increased. Undoubtedly, the area saw rapid price appreciation between 2020 and 2023. While some of this was due to supply and demand, much of it had to do with changing the nature of Long Beach Island homes. A new or near-new home with modern amenities and a swimming pool will obviously cost more than a 1950s-era Cape Cod-style home. This massive recent investment in the area and the new construction boom on Long Beach Island have changed the LBI real estate market forever.

 

 

 

Building A New Home | LBI Real Estate | Long Beach Island New Jersey

Building a New Home to Flood Guidelines After Hurricane Sandy

New Construction and the Long Beach Island Real Estate Market After Hurricane Sandy

Hurricane Sandy, which made landfall on Long Beach Island at the end of 2012, created one of the most active building environments the area has ever seen, matched only by the COVID market. Building a new house on Long Beach Island can be an excellent investment and can realize immediate equity in the LBI NJ real estate market, and the aftermath of Hurricane Sandy provided many opportunities. Homeowners and buyers alike in the LBI real estate market took advantage of storm-damaged homes to engage in the redevelopment process. Rebuilding after Hurricane Sandy took into account new flood codes that will lessen the risk of damage from future storms and lower your flood insurance costs. There are some critical points to needed to be considered when rebuilding after Hurricane Sandy on LBI:

  • Flood insurance is based on the perceived risk associated with the property.
  • Many factors determine risk levels, but flood zones and elevation above sea level top the list.
  • Foundation systems and flood vents can significantly impact the amount a homeowner pays for flood insurance on Long Beach Island.

There are three predominant flood zones on LBI. They are an “A” flood zone, a “V” flood zone, and the “X” flood zone. All properties on Long Beach Island have a base flood elevation associated with them, and all homes are in a flood zone. Most of Long Beach Island falls into the “A” flood zone. Homes in an “A” zone are permitted to have solid block or piling foundation systems and usually fall into a Base Flood Elevation (BFE) of 7-9 feet. The local municipality can provide guidance on how high to build your home to be in accordance with these codes. 

“V” zones are the most restrictive, with higher elevations (usually 9-15 feet) and limitations on what can be used as a foundation system. For example, solid wall foundations (blocks) may not be permitted, as the foundation system needs a breakaway wall system. “V” zones are mostly limited to the oceanfront and some bayfront areas on LBI. The “X” zone is the best zone, as it is the least restrictive, with some lenders not requiring flood insurance in these zones! There are several of these areas throughout Long Beach Island, and they enjoy a higher natural elevation. 

 

 

 

Building A New Home | LBI Real Estate | Long Beach Island New Jersey

Building in the A Flood Zones on Long Beach Island


FEMA defines an "A" and "AE" flood zone as having a 1% chance of an annual flood (it is partly from this definition that the term "100 year storm" comes from when speaking of Hurricane Sandy and other weather related events). Homeowners in an "A" or "AE" flood zone on Long Beach Island can expect the following:

  • Flood insurance rates in an "A" or "AE" zone will be less expensive than a "V" zone.
  • Building codes will be less restrictive in an "A" or "AE" flood zone on LBI.
  • Breakaway wall foundations are typically not required (although they are recommended).


In the wake of Hurricane Sandy, the LBI real estate market has become very reactionary to flood zones and flood insurance. Due to FEMA's interpretation that flooding will be less destructive in an "A" or "AE" flood zone, flood insurance is less expensive than a "V" zone, and some buyers in the LBI real estate market will limit their search to these areas. For a property to be zoned a "V" zone on LBI, FEMA must ascertain that the subject property will sustain the direct impact of a 3-foot or higher wave. In the eyes of FEMA, properties on LBI in an "A" or "AE" flood zone do not share this risk (but they still are at risk of flooding). It is for this reason that homes in "A" and "AE" flood zones can usually be built on a solid block foundation with flood vents rather than the breakaway wall system required in a "V" zone. For some buyers, an "A" or "AE" flood zone on Long Beach Island will be more attractive in the real estate market. Many buyers are concerned with the potential for flood insurance rate increases and the impact these increases will have on the future value of the Long Beach Island real estate market. Overall, flood insurance is very affordable in the LBI real estate market, and the cost has not decreased property values on Long Beach Island. Recently, there have been revisions to the national flood insurance program, and the flood insurance market has expanded to include both public and private carriers. These efforts have made flood insurance more manageable and cost-effective. 

 

 

 

Building A New Home | LBI Real Estate | Long Beach Island New Jersey

Building in the V Flood Zones on Long Beach Island


A "V" flood zone on Long Beach Island is considered to be an area of higher risk. Therefore, flood insurance rates tend to be higher in a "V" zone than in an "A" or "X" zone. Building restrictions and additional construction methods are recommended to safeguard the house and surrounding area. Understanding how new construction in a "V" zone on Long Beach Island NJ is handled and its impact on the LBI real estate market is essential. In short, homes in the V zone must be built higher, with breakaway walls, and to achieve the best rate, built without enclosures below the structure. When building in an "A" or "V" flood zone, both FEMA and the towns on LBI have established a minimum required height, often known as the BFE (Base Flood Elevation). Building higher than the BFE should lower the flood insurance premium on LBI and future flood risk. FEMA offers a helpful example to demonstrate that by building higher, the flood insurance rate (premium) on Long Beach Island will drop significantly

  • A single-story home built on wood pilings in a "V" flood zone built to BFE (base flood elevation) would have a monthly premium of roughly $878/ month.
  • A single-story home built on wood pilings in a "VE" flood zone built 3 feet ABOVE BFE (base flood elevation) would have an estimated monthly premium of only $315/ month!
  • This is a savings of almost $6,800/ year on flood insurance on Long Beach Island, NJ!
  • The above is only an example, and every home must be evaluated to determine the actual insurance cost. 

Building in the V zone on Long Beach Island shares much in common with the rest of the area. Understanding the differences before embarking on the building process and discussing them with your contractor is helpful in accounting for any potential costs or delays. 

 

 

Building A New Home | LBI Real Estate | Long Beach Island New Jersey

Foundation Systems on Long Beach Island New Jersey


When building a new home in the LBI real estate market, you must start with the foundation! Two foundation systems are commonly used for new construction on Long Beach Island. A piling support system with a breakaway wall foundation and flood vents is the most common by far. Flood insurance companies will typically view this system as less risky and can often result in a discount on the flood insurance premium. Less commonly used are block foundations. Although this was the go-to method for homes built in the early stages of development on LBI, these systems are less widely used for new homes on LBI. The most frequent use of a block foundation on Long Beach Island is in commercial buildings and house raising. Regardless of the type of foundation utilized, flood vents are an essential upgrade that can significantly raise or lower the cost of flood insurance on LBI. Generally, you need 1 square inch of flood vent for every 1 square foot of enclosure. These flood vents provide a first line of defense against flooding by reducing the stress on the building's foundation in a flood event. Regardless of whether you plan to buy a knockdown on LBI or build on an existing property, keeping in mind the guidelines imposed by FEMA will lower your risk and save you money in the long run! Anyone looking to build a new home in the LBI real estate market should discuss the different types of foundations to see what makes the most sense.

 

 

 

Long Beach Island New Jersey Real Estate | LBI NJ Real Estate | Nathan Colmer
Long Beach Island New Jersey Real Estate | LBI NJ Real Estate | Nathan Colmer
Long Beach Island New Jersey Real Estate | LBI NJ Real Estate | Nathan Colmer
Long Beach Island New Jersey Real Estate | LBI NJ Real Estate | Nathan Colmer

Real Estate Tip

Seek a wider lot with a more shallow depth for construction over a narrow and long lot. This will give you greater flexibility in your design and make the house more functional.

 

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Your LBI Beach House is a Phone Call Away! Call Nathan Colmer 609-290-4293

Nathan Colmer

609.290.4293

ncolmer@vandykgroup.com

The Van Dyk Group

12800 Long Beach Blvd

Beach Haven Terrace NJ 08008

609.492.1511