Slow sales at the beaches Real estate agents try to stay upbeat in face of recession

October 04, 1992|By Audrey Haar | Audrey Haar,Staff Writer

Real estate agents from Easton to Ocean City are doing their best to remain upbeat in a downbeat market.

"The drought has been more extensive than we thought it would be," said Alfred B. "Tim" Kagan, president of Kagan Associates Inc. in Easton.

"Nobody is moving" into new homes, added Merrilie D. Ford, president of the Talbot County Board of Realtors and manager of Long & Foster Real Estate's Easton office.

Real estate agents like to point out that the availability of low mortgage rates is driving a slow but steady market for homes that are priced right. But as the recession lingers, consumers seem to be pulling their purse strings even tighter -- many seem more worried about job security than thoughts of a vacation home, retirement home or investment property.

Gone are the days when an investor could count on hefty profits by turning over a home after owning it for just a few years.

"Buyers are very sophisticated and they are smarter than they used to be," observed Judy Moore, a sales associate with Wieland Realty in Easton.

Unfortunately, not all sellers are as smart. Some insist on hanging onto lofty profit expectations in a flat market.

Patricia Carl, a sales associate in the Easton office of Walsh & Benson, tells of a home on a 10-acre site in the St. Michael's area that languished on the market for a few years while the seller held onto an asking price of $800,000.

After its price was finally dropped three times, the $800,000 house recently sold for $550,000. The seller could have gotten about $100,000 more for the house if it had been realistically priced at the start, Ms. Carl suggested.

Of course, the recession isn't bothering everybody (a Falls Church, Va., couple recently plunked down $800,000 in cash for a waterfront hideaway near the Chesapeake Bay, according to one agent), but in general, the sales climate for homes on the Eastern Shore mirrors the rest of the region.

Since Ocean City prices dropped two years ago, for example, the market has stayed flat, said Paul Faulstich, who owns Leland Realty in Ocean City and provides real estate information through his Worcester Information Center.

"Prices are slipping in asking price rather than sale price," Mr. Faulstich added.

People who bought Ocean City homes 10 years ago at the beginning of the real estate boom can still get twice their original purchase price, but people who bought homes just five years ago would be lucky to get their money out, Mr. Faulstich said.

Now, buyers of oceanfront vacation homes are keeping the property for their own use instead of renting them, said Robert Jester, associate broker and appraiser with Moore, Warfield & Glick Realtors in Ocean City.

Mr. Jester also noted a recent influx of buyers from New York and northern New Jersey who are attracted to comparatively lower home prices in Ocean City and don't mind the four- or five-hour drive from New York and New Jersey.

In the Ocean City area, most new home construction is in West Ocean City. The homes, priced in the $90,000 to $200,000 range, are selling primarily to younger, year-round residents rather than to vacationers and retirees. But retirees who bought land in the past are taking advantage of low interest rates to start building their retirement homes, agents say.

David H. Brooks, a partner with Lipman Frizzell & Mitchell, a real estate appraising company in Baltimore and Silver Spring that produces an annual report on real estate in Ocean City, predicts that the beach resort's home-sales figures will decline again this year.

"Ocean City had a crummy year in terms of occupancy, probably because it rained every weekend," Mr. Brooks said. He pointed out that slower vacation traffic also lessens the community's exposure to potential home buyers.

Real estate sales are also flat at Bethany Beach, Ocean City's northern counterpart in Delaware. Bethany, which lacks the hustle and bustle of Ocean City, has a lower population density, and therefore substantially higher home prices.

One trend seems to be that people are opting for a lower-priced home that is inland rather than spending for oceanfront property, said John O. "Skip" Valliant, president of Seacoast Realty in Bethany and Dagsboro, Del.

In Easton, there has been a steady market for entry-level homes, and mid-range homes advertised with prices under $200,000 still draw a strong response, Mr. Kagan said. "There is a large inventory of waterfront homes in the $400,000 to $700,00 range. They are just not selling."

Most construction in and around Easton -- including St. Michael's, Tilghman and Oxford -- is concentrated on the entry-level home market in Easton. But one large, high-end development is Tilghman-On-Chesapeake, a 186-acre waterfront community on Route 33 on Tilghman Island.

Columbia-based developers plan to build 75 detached homes on 3/4 -acre lots. They will be priced from $259,000 to $600,000. Since construction started two years ago, three houses have gone up and a Yacht Club has opened.

In Salisbury, the real estate market is significantly different from Easton and the ocean resort areas, according to Judy Brown, president of the Coastal Association of Realtors in Salisbury.

The Salisbury area is a regional hub for doctors, lawyers and an educational community that centers around Salisbury State University. Retirees who want to leave the city also want to be near good medical care like that found at Peninsula General Hospital, Ms. Brown said.

Strong sellers in Salisbury are houses in the $70,000 to $85,000 range that qualify for FHA and the state's Community Development Administration financing. Harder-to-move houses in Salisbury are in the $85,000-$115,000 range, which usually sell to the move-up buyer, Ms. Brown said.

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