Updated Supply vs. Demand Information (Summer 2013)
So far, there have only been 5 Oceanfront single family home sales for the first six months of 2013. This matches record lows of 2nd half of 2009 and also the second half of 1994. In addition, the number of oceanfront properties (supply) for sale has increased from 38 the last half of 2012 to 44 oceanfront properties currently listed for sale.
The good news is there are currently 4 oceanfront properties under contract and it appears our 2nd half will continue to have many more sales than our first half of 2013!
I calculate our supply to demand curve by dividing the number of oceanfront properties sold in the latest half year period by the amount of oceanfront properties currently for sale. These are two key factors to prices stabilizing with values on the rise in the near future. This first half of 2013 our supply vs. demand ratio is .11 which is much less than last year. We are in much better condition than back in ’94, when the ratio dropped to .06, I feel this ratio will gain quickly as time goes on and sales volume becomes back to normal.
Currently, there are 44 oceanfront properties available for sale, more than the 38 available last year, but better than the 55 available at this time 2011. There were 59 homes listed for sale during the first half of 2010. Our record low of 15 oceanfront homes on the market was in 2002. Our high was 101 oceanfront homes available in 1993. There are approximately 1100 oceanfront homes on LBI.
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Original Article
Simple economics states that if there is an abundance of a product (waterfront homes) and few consumers (Buyers) values will descend. It is when we reach an equilibrium that values become stable. When the product is scarce and the demand is high, values increase. During 2002, supply vs. demand ratio was the highest in 21 years, at 1.09 for oceanfront sales. The current supply vs. demand ratio of 0.115 on oceanfront is the lowest it has been since I began documenting data in 1992.
Bayfront property seems to be consistent with last year at 0.17. This is comparable to the ratios back in 1992 thru 1994, when prices were fairly stable and took a few years before seeing any appreciation. This is a substantial decrease in general and has proven sales have slowed down these last few years. Currently, there are 63 oceanfront and 45 bayfront single-family homes available for sale on LBI.
Our record low of 15 oceanfronts on the market was in 2002. Our high was 101 oceanfront homes available in 1993. The number of oceanfront sales has decreased from a high of 50 in 1999 to 23 in 2007, 21 in 2008 and only 14 in 2009.
With this minimal number of sales versus the number of waterfront properties available for sale increasing, it appears that prices may continue to decline. The most desirable and competitively priced waterfront homes will sell. Those that are overpriced will not.
