Atlantic seaside communities from New Jersey's Cape May to the Outer Banks of North Carolina are readying themselves for the prime fall home-buying season with traces of trepidation.
After more than a decade in which home prices in some seaside communities rose as much as 30 percent annually, prices have flattened and the inventories of unsold homes have grown.
For the first time in years, prospective buyers seeking to buy vacation homes at the beach are finding themselves with new options, more power in the market and more homes from which to choose.
"Because of the economy being the way it is, it is truly a buyer's market," said broker John Williams, president of the Greater Wildwood-Cape May County Board of Realtors. "Some excellent deals can be had."
Jim Waggoner, sales manager for Long & Foster's Ocean City office, said: "There's now a tremendous selection."
The seaside communities are apparently feeling the same forces affecting the major metropolitan areas from which they draw the bulk of their sales.
Real estate agents in the seaside communities said that although the areas' underlying economies have not changed much, buyer perceptions have changed. In many cases, buyers are bringing their market perceptions with them from home.
"There is a general skittishness about real estate values," said real estate broker Doug DuVal of Re/Max Ocean Realty in Kill Devil Hills, N.C. "When people are taking a beating in their own area they tend to feel the rest of the country is doing the same thing."
It is unclear at this point how long the slowdown may last. Prices are not expected to plummet by any means and thus far they appear stable.
In fact, because financially secure, affluent people are those most likely to own vacation homes, many homeowners in those areas are able to hold on to a property without selling for an extended period of time, particularly if they are able to rent the properties out during the prime summer season.
Nevertheless, real estate agents are looking to the fall season for signs of what may be in store during the next year or so. Fall is the prime selling season because vacation homes are generally occupied or rented during the sunny summer months and would-be buyers are leisurely enjoying their own vacations.
"We're looking to the fall to see if the market will be rejuvenated," said Steve Price, president of the Greater Ocean City Association of Realtors. "We're looking to this fall to show an upswing in the market."
It's a noticeable sea change for markets where prices generally only went up, up, up. A recent University of Delaware study found that oceanfront property along the Delaware beaches had appreciated 30 percent a year for the last 15 years.
Another recent study indicated that those boom times may soon return. A survey financed by three real estate trade groups found that annual demand for vacation homes may triple in coming years as baby boomers reach peak ages for the purchase of second homes.
The survey found that baby boomers expect to buy second homes at rates much higher than the rest of the population. Demand for second homes could soar to as many as 450,000 purchases a year from about 135,000, which could cause prices to skyrocket.
But there may be other factors mitigating against such a surge in demand. Some real estate agents worry about the Persian Gulf crisis and its possible effect on gasoline prices, which could cause families to cut back on plans to travel long distances by car.
Others wonder whether housing prices have risen so high that younger families are priced out of the vacation home market.
For now, however, real estate agents in many seaside communities are left learning to do business in a new way. With buyers feeling so cautious, successful sales people are finding they must spend a lot more time with each client.
"We're certainly not order-takers by any stretch of the imagination anymore," said Ocean City's Price. "People used to come in and say, 'I want a condo in Ocean City. What's available ... and here's a check.' " Now they need "more nurturing" before they will make their purchase, he said.
Meanwhile, prospective buyers are finding themselves in a stronger position than they have been in the past. For them, it's an era of new options, more choice and the luxury of time for research and deliberation.
Here is a review of popular seaside real estate markets for Washington area residents:
Cape May, N.J.: This favorite community of young professionals, which bills itself as the nation's oldest seaside resort, is notable for its profusion of elegant Victorian homes, many of which have been converted into bed-and-breakfast businesses.
About 10 percent of its buying market is made up of Washington area residents.
Small single-family homes there can be bought for as little as $150,000, while a cedar-shingle, eight-bedroom beachfront home recently sold for about $800,000.
The going rate for a bed-and-breakfast business is $400,000 to $750,000, although it is becoming increasingly difficult to obtain the city permits to operate the businesses because of parking problems. Prices there have plateaued recently, with some marginal declines when the sellers needed to sell their property.
Rehoboth Beach, Del.: Single-family homes predominate at this low-key resort. A short boardwalk and longer shopping strip provide entertainment at night. Dewey Beach attracts the younger crowd and is the more likely buying site for groups buy a house.
Homes in the outlying areas go for as little as $80,000, but houses within Rehoboth city limits average about $150,000. Properties about two to three blocks from the beach cost between $250,000 and $350,000, with beachfront properties considerably more expensive.
"The market is a little bit slower than we're used to," said real estate broker Derrick Lingo of real estate firm Jack Lingo Inc.
Ocean City, Md.: Honky-tonk central, this high-rise community features a long activity-filled boardwalk loaded with families and teenagers. Ocean City is a nearby favorite for Washington area residents, who make up about 30 percent of its buyers.
It's overwhelmingly an apartment-style market, with about 85 percent of the properties listed for sale defined as condominiums. Prices vary depending on whether the property is what the real estate industry describes as oceanfront, oceanblock, bayside or bayside waterfront.
Two-bedroom condominiums there range in price from $50,000 for a modest place to about $150,000 for a unit that fronts on the ocean. The region's market has not entirely rebounded from the passage of the Tax Reform Act in 1986, which made ownership of investment properties less attractive, according to local brokers. Its strongest markets are the retirement community-oriented new developments in West Ocean City.
Outer Banks, N.C.: Farther from the madding crowd are the communities that cluster along the coast north of Cape Hatteras. The area is considerably less expensive than those closer to the major metropolitan areas.
Vacation cottages there start at about $50,000, with three-bedroom, two-bath homes within walking distance to the ocean selling from $70,000 to $130,000. Oceanfront homes in pricey communities such as Duck, however, range from $350,000 to $750,000.