Sunday, May 10, 2009

Second Home Shore Foreclosures

Busy with the nice weather and holiday - so no example posting today. But we will look at an article from the Press of Atlantic City titled Data show many shore foreclosures on second homes. Of course it is much easier to let go of that investment or vacation house rather than your primary home. When the investments seemed like the only way was up you had many people invest who did not have the means. But like everything else during the bubble the answer was just to sell the property if one got into trouble. We now can see that strategy does not work forever. Now the answer seems to be for those into trouble just foreclosure or walkaway. Sure your credit will be hurt but so many people are in the same situation that some of the stamina has gone. So let's take a look at the article -

Anecdotal evidence suggests second homes make up a significant part of the foreclosures along the shore, where barrier islands are mostly covered with housing that's not occupied year-round.

In a way, a foreclosure on second home is less distressing, since it usually means someone well-off is losing an investment, vacation or retirement property, rather than someone losing their primary residence. But there was no way to put a number on how many foreclosures might be in that non-primary market.


Sure enough, RealtyTrac's figures show an unusually large percentage of owner-absent properties among shore homes with a foreclosure filing.

In Atlantic and Cape May counties, 36 percent of properties in foreclosure last month were owned by people living elsewhere.


31 percent, and Ocean County, with 20 percent, fit the national pattern of about 30 percent of owners of foreclosed homes living elsewhere, RealtyTrac said.

Given the dominance of second homes, and the paucity of year-round rentals, my guess is that one-fifth to one-third of the foreclosures in Atlantic and Cape May counties are second homes.

The author is correct that while the foreclosures are bad it is not as bad as primary residence properties. It will be interesting to see how short-term summer rentals are affected by these foreclosures. Long-term renters have rights - but what will happen to weekly and monthly renters? There will definitely be some drama unfolding down at the shore this summer...

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