Is the Correction Over?
The question on everyones mind is: Is The Correction Over?
Most of the time when you ask people what they know they will end up telling you what they think. There is a difference you know. I know the Sun rises in the A.M. I know the Moon will set at night. Everything else falls under the broad heading of what I think. So if you asked me sitting right here today if I Think the Real Estate Market in Sea Isle City has completed its correction I would have to say “Yes I Think So”.
Why Do I Say That?
The answer to the second question will not be as short as the answer to the first question, but Ill still give it a shot. So lets take a look back to when this all started. Millions of years ago before the Dawn of Man………..No just kidding.
Back on track……..In the Fall of 2003 the price of a New Construction Townhouse in the 100 Block was sitting at $724,000 and after a sluggish start to that season the price started to drive and by the Memorial day 2004 had moved all the way up to around the $789,000 mark. All the inventory had sold and the Developers started to look for tear downs for the next season.
Owners of potential tear downs in the 100 block were asking $1,000,000 for the first time ever and Developers paid it. After all, the wheel had been turning without a hitch for years. So in the Fall of 2004 the Developers brought their product to the market at $869,000.
Now while a few people did purchase New Construction Town Houses in that Fall and Spring up and around that number, the truth is that this product was being largely ignored at that price while lesser priced products here and in towns like North Wildwood continued to sell. It was the first time that had happened in years.
The Idea that the Run was over had not been spoken outloud yet though and when the Spring and Summer of 2004 came around Developers continued to purchase ground and make plans for product that would be developed in the Winter of 2005. Keep in mind that Owners were jumping at the opportunity to sell their cottage for a “Million Bucks” so things continued to move forward as large entities with momentum do.
Then The Storm Hit! ………..Literally.
Hurricane Katrina scared a lot of people. Speaking just for myself, I remember being afraid watching the News coverage and I was 1200 miles away. People love to share complex economic theories that they heard someone else put forward on the Evening News or in The New York Times. So there is no shortage of opinion out there as to why it slowed down so completely last fall. My reason is not complex at all. I think a lot of people felt the same way I did when that storm hit. I think a lot of people got scared at the same time about a lot of different things that they had not been scared of in years.
That’s how the collective mindset works. So in the fall of 2005 as all that inventory was added to the already existing unsold inventory from the year before the potential buyers began to see an opportunity in waiting. And so they did. The waited to see if the sky was going to fall and it didnt. So when the spring and summer of 2006 arrived so did our buyers. Not in the hordes they had been in years past but showed up they did. We are now in the process of selling off a very large inventory and are well on the way to doing that as more buyers who feel as if the price has settled move into the market. And as far as a Correction goes I would like to offer this.
The high water mark that was reached in the Spring of 2004 for a 100 block Town House in the blocks between 60th and 80th Streets was $789,000. The list price for that same house today is ……….. $799,000.
The truth is that the only correction experienced was from a price that never really existed. Sometime in the spring off this year we should see the completion of the “sell off” of the Developers older inventory and as new inventory comes to the market with the price adjusted for the reduced land cost , we should see a more stable price establish itself.
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