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

Trade Up in the LBI Real Estate Market

Nathan Colmer | Van Dyk Group

C: 609.290.4293 | O: 609.492.1511

Trade Up in the LBI Real Estate Market

 

A falling or changing Long Beach Island real estate market may offer opportunity for those looking to trade up to a larger home or a better location. Property values on LBI appreciate and depreciate at different rates so depending on the style of home you are looking to buy, where your current home is located and when you initially bought your home there may be an excellent opportunity to buy a "better" house well under market value.

 

 

Trade Up in the LBI Real Estate Market

LBI Real Estate Sellers

 

 

 

Trading Up in the Long Beach Island Real Estate Market

Before considering such an ambitious transaction it is good to familiarize yourself with current market trends and how Long Beach Island home sales have been trending each month. A study of the different locations on LBI is also helpful as it can provide some guidance into where the best values are

Trade Up in the LBI Real Estate Market

Taking a Loss and Making Money in the LBI Real Estate Market

While nobody likes to lose money under the right conditions doing so can actually put you ahead in the LBI real estate market. Let's run a quick example.

In the last market rise and fall the average depreciation on Long Beach Island was about 12% (it is worth mentioning that areas and home styles appreciate and depreciate at different rates). For our example we will use the 12% figure.

Let's assume you have a house that was purchased for $800,000

When the 12% depreciation is applied the new value of the home will be around $705,000.

When we deduct a 5% closing cost figure to this number the net proceeds of this transaction would be about $668,800

This represents a total loss of $131,200 before any ownership costs are accounted for (although if you have rented your home these may be at minimal).

Now let's assume you are looking to buy a home that WAS priced at $1,200,000 on Long Beach Island.

When the same rate of appreciation is applied this home will have dropped in value by about $145,000.

This puts you ahead by about $14,000 AND you have a home that is worth considerably more in the LBI real estate market.

This does not take into account the fact that higher priced homes tend to see higher rates of negotiation in a slower market so there is a good chance you can take advantage of that situation further.

 

 

 

Trade Up in the LBI Real Estate Market

Getting Specific with Locations on Long Beach Island

As I mentioned above different locations will appreciate and desperate at different rates.

When looking to trade up or down buying in a different location may return a greater than expected equity position.

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.

Trade Up in the LBI Real Estate Market

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 ad 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.

Trade Up in the LBI Real Estate Market

 

Looking at the averages of the locations above the owner of a home on the bayside would have lost about $170,000 in the value of their home. However if they were to buy a home on the oceanblock, where the difference between the average prices was a little under $300,000, the savings is immediate and considerable. Even when closing costs are accounted for by trading up in the LBI real estate market from a bayside home to an oceanblock home the buyer would save about $100,000 in the transaction!

 

 

 

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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