Ocean City's real estate market suffers in wake of bad weather, weak economy


June 13, 1993|By Audrey Haar | Audrey Haar,Staff Writer

Ocean City -- Ocean City continues to attract a wave of tourists, but the real estate market is stagnant.

The tourists are still coming to the seashore but their visits are less frequent and shorter. And when it rains weekend after weekend, as it did last year, people aren't inclined to stay even for a vacation, much less to buy a home.

In addition, the sluggish economy has taken a toll.

"The economy is always a factor for us because we are a second-home market. We are the first ones to be cut out," says Barry Weir, president of the Ocean City Association of Realtors and sales manager of English Realty in Ocean Pines.

Home sales in Worcester County were 1,443 last year, down 2.6 percent from the 1,481 homes sold in 1991, according to the Worcester Multiple Listing Service Inc. And sales were down 5.9 percent in the first quarter of this year, 239 compared to 254 for the same quarter last year.

In another report of Ocean City home sales, condominium sales continued their general downward trend over the past few years by dropping 16.4 percent last year, reversing the blip when they increased 23 percent in 1991.

And home prices are falling, too. The average price for a condominium fell 2.9 percent to $100,008,according to a study compiled by Lipman Frizzell & Mitchell, a real estate appraisal company in Baltimore and Silver Spring. Declines were recorded for all types of condominiums: oceanfront, oceanblock, bayside and bayfront models.

"I suspect people are afraid to buy real estate. There is still som fear. It will take time," says David H. Brooks, partner with Lipman Frizzell & Mitchell.

Sellers who remember the booming real estate market of the mid-1980s and still hope to get top dollar for their property in today's market need a reality check, Realtors say.

"Oceanfront, two-bedroom units that used to go for $155,000 to $165,000, you can now get for $140,000. And I have seen lower prices on occasion," says Robert Jester, associate broker and appraiser for Moore, Warfield & Glick in Ocean City.

The market is so slow that Mr. Weir says he tells his sellers: "I you get an offer, look real hard at it" -- even if it, at first, seems way too low.

But while the residential real estate isn't robust at the moment agents and other real estate professionals feel that the lure of the surf will win in the end, and sales will eventually rebound. Most of the desirable lots on the peninsula are already developed, so there will always be a limited supply of homes.

Plenty of vacancies

Ocean City real estate agents are also worried about the summer rental market.

Many homes in Ocean City are sold to vacationers who, after spending a few days here, decide to buy a house so they can return anytime. But if fewer people rent, or those who do are having a bad time, home sales will also be hurt.

"This was a very unusual year," says James Waggoner, directoof resort rentals and sales manager of the Ocean City sales office of Long & Foster Realtors. People usually start booking summer rentals in January, with February and March as the busiest months. This year vacationers waited until May to make a decision, but now rentals are at normal levels, Mr. Waggoner said.

Lipman Frizzell & Mitchell reported that cars crossing the Ba Bridge were up 3.3 percent last year from the year before, yet the rental market was only up 0.2 percent. The report concludes that the increase in Bay Bridge crossings indicates that Ocean City is still popular with tourists, but visitors are taking more day trips instead of renting a place and staying all weekend.

One statistic to back up this view is the "demoflush" populatioestimates, which calculates weekend population in Ocean City by the amount of water used. The 1992 population figures show a 4.2 percent decrease from the year before, and in 1991 that number also fell, down 1.3 percent from 1990.

Ocean City business people can see that tourists are tightening their purse strings. While they are optimistic about having a healthy summer season, they find themselves hanging onto the weekend weather reports and praying for sunny skies.

"When the economy was better, people came anyway. Now they wait to make sure the weather is good," said Alex FauntLeRoy of the Ocean City Chamber of Commerce.

People are more careful with their money than they were a few years ago, observes Sam Cook, general manger of the Carousel Hotel and Resort on 118th Street. "People are coming for shorter pTC stays and are not staying as long as they used to. Instead of staying a week, they are staying three to four days."

And they are watching their pocketbook once they get here. "All of our rooms have kitchenettes," he said. "We see many more people going to the grocery store, and more people are eating in their rooms."

And when they do eat out, they don't splurge as much as they used to. "It's hard to sell dessert," says David Bryant, general manager of Phillips Beach Plaza Hotel at 13th Street on the Boardwalk.

The outlook

In terms of future growth, it's the off-season that holds the most promise. While the volume of room rentals, based on rental tax collections, remained a flat 0.2 percent last year, the month of November had a 46.5 percent rise from the year before and February had a 27.2 percent increase, according to the Lipman Frizzell & Mitchell report.

The report cites the increase in group and convention business in the off-season as an indicator that Ocean City is expanding its customer base and appeal.

And the forecast for real estate sales this year?

"Anytime the weather impacts real estate values it's tough to predict," says Mr. Brooks of Lipman Frizzell & Mitchell.

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