Nathan Colmer | Van Dyk Group
C: 609.290.4293 | O: 609.492.1511
Nathan Colmer | Van Dyk Group
C: 609.290.4293 | O: 609.492.1511
In a falling Long Beach Island real estate market it is important to understand how the location of a home impacts value. This can help you to narrow down your search to only the specific areas and parts of LBI that most appeal to you and to your long term investment strategy.
The primary locations are: oceanfront, oceanblock, oceanside, bayside, bayfront and Lagoonfront
Each location will appreciate and depreciate at a different rate
Average prices can be skewed by flip houses, poor locations, older/newer homes etc. so when you identify the location you want I can help you narrow down the specifics of the market
When looking to purchase a home on LBI in any market cycle one must keep in mind the basics. The two biggest drivers of value on LBI are location and lot size. This has to do with the simple fact that the land is far more valuable than the structure that is built upon it.
When considering location we have to look at both the town/area of LBI in which the house is located as well as the proximity to the bay or beach. In a falling market not all areas of LBI will depreciate or appreciate at the same rate and the results are rather surprising.
In 2006, the height of the market, the average price of a single family home on the oceanblock was rounded to $1,315,000. In 2009, the bottom of the market, the average price of a home was $1,018,000. This represents a drop of about 23% overall. The chart below shows the market trends over this time frame.
By contrast homes on the bayside saw a lower drop in price on average. In 2006 the average price of a single family home was rounded to $847,000 and in 2010 the price was $677,000. This represents a drop of about 20%, a full 3 percentage points lower than the averages seen for the oceanblock.
I must point out that this only takes into account the average price, a data point that can be easily skewed. During a rising market there is usually an abundance of speculative building taking place and often times these investors are forced to drop their price considerably due to either being over leveraged or having bought in the wrong location. For example homes that are sited on Long Beach Blvd will depreciate at a greater clip than a home that is one off the beach. These variations can and do skew the data.
The general theme remains that location and lot size above all else are the best preservers of value on Long Beach Island. This is well demonstrated in looking specifically at the year 2010, when the LBI real estate market began to recover The average price of an oceanblock house in 2010 was rounded to $1,115,000 having increased about $100,000 in one year. When compared to the height of the market in 2006 this represents a drop of about 15%. In otherwords while oceanblock houses dropped at a faster rate than bayside, the desirability of that location saw a much faster recovery than a home on the bayside did thus limiting the loss of equity.