Q: A recent survey found New Jersey to be the state with the highest number of people moving out of a state to another location. In view of this, why would the Jersey Shore be seen as a hot spot for housing?
D.J. Gluck: Yes it is true, New Jersey residents are moving out of the state seeking retirement homes, lower taxes and work opportunities. With that being said, the Jersey Shore – especially the South Jersey Shore – is an extremely hot housing market and is in high demand.
The South Jersey Shore is comprised of a series of Barrier Islands stretching down to Cape May. The homes and land on these Islands are considered a commodity with very few undeveloped areas. Most of these Islands have more than 65% summer occupancies. As the economy continues to improve and second and third homeowners’ net income continues to rise, we are expecting to see more Buyers looking to make purchase decisions in these areas as well as a wake of older homes coming down in lieu of more modern luxury new construction.
Q: New Jersey also has some of the highest property taxes in the country. How does this impact first-time homeownership?
D.J. Gluck: Higher real estate taxes are certainly an issue in the state. The majority of the counties with highest property taxes are located in North Jersey and in some of the larger cities.
First-time homebuyers represent a segment of the housing market that will need to improve in 2015. Real estate taxes will directly impact their purchasing power. On the other hand, first-time home buyers will be able to take advantage of some of the best mortgage rates we have seen in years and more importantly, some advantageous pricing in certain markets. First-time buyers will be the beneficiaries as our housing market continues to improve and recover.
Q: How can Millennials overcome the burdens of high student loan debt and low wages in order to experience homeownership?
D.J. Gluck: The high amount of student loan debt is a macro issue that is going to impact our overall economy moving forward. Without some intervention, it will cause a similar situation to the mortgage crisis post-2008, only on a smaller scale.
As long as the country is able to create new jobs and lower unemployment while increasing the GDP, and as long as rents are increasing while mortgage rates are staying low, the housing market will enjoy the perception of a good value, allowing Millennials to take advantage of homeownership. This will also allow step-up buyers fuel to the housing recovery and increase property values. First-time homebuyers will see an increase of appreciation, equity and net worth.
Q: What opportunities exist for Millennials seeking housing in the ailing Atlantic City region?
D.J. Gluck: Recently, there have been four casino closures in Atlantic City. But three of the four casinos have already been purchased and there is going to be an influx of non-gaming development in the Atlantic City area.
If Atlantic City is able to adapt to these changes, we will see an increase of new jobs and employment for these Millennials. As long as there are employment opportunities, we will see younger folks entering into the housing market throughout the Atlantic County area.
Better Job opportunities in 2014 led to a very positive influx in employment for the under-35 population. In 2014 they saw a job growth rate that was 60% better than overall employment. This surge of jobs towards the young will help drive the housing markets this year even as home prices are expected to rise 4% to 5%. The expected growth in rents of about 3.5% annually will also push millennials towards buying homes. Soleil SIR representative DJ Gluck says, “the turbulence in the economy in recent years has deterred millennials from entering the housing market. Now they are the biggest benefactors of the economic uptick, and will use that to their advantage as the largest group of first-time buyers in 2015”.
This year because of the increased amount in inventory the amount of competitive pressure for buyers will be reduced. Instead that pressure will be put on sellers, which is good for first time buyers. According to the National Association of Realtors, a 2009 American Housing Data survey put the average age of first-time home buyers at 34, and then a report from them in 2012 estimates the average age for first-time buyers at 31.
Soleil Sothebys International Realty is seeing a similar trend in New Jersey shore towns as well. These positive trends across the Jersey coast mean that millennials will be able to start building their portfolios and developing strong investments.
Soleil Sotheby’s International Realty is online at http://www.soleilsir.com