Photos Courtesy of Butler’s of Far Hills, Inc. Photography by Laura Moss

Vacation homes are a boon to New Jersey’s economy and beyond

By Wendy Greenberg

Second homes represent a lifestyle change, an investment, and sometimes several years of exploring myriad locations. But often, the second home becomes as beloved as the first home, and many times the homeowners don’t want to go home. They ARE home.

As Spring Lake realtor Cindy Napp says, “Life is short. Buy the beach house.”

Napp, a Jersey Shore expert with Diane Turton Realtors in Spring Lake, credits the convenience of
I-195 – stretching from Mercer County to Monmouth County – for the Jersey Shore’s ever-increasing popularity as a second home location. It is also convenient to reach from northern New Jersey.

“People coming here want to get here Thursday night, and get to work on Monday morning,”‘ says Napp. “They want to be able to set up a situation that for the future will be a ‘grandchildren magnet.’ Beach homes are a permanent lure for the whole extended family, toddlers to teens and beyond,” says Napp, who specializes in Monmouth County shore properties. “A place in the suburbs, no matter how attractive, doesn’t tempt older children like a spot near the beach. Shore places quickly become multi-generational gathering spots.”

Why? “Well, there is only one Atlantic Ocean,” she says. “It’s a great quality of life, and the ride is easy.”

For the areas from around Long Branch down to Point Pleasant, the area is “completely built out,” according to Napp. There is little new construction, and it is mostly older homes. Many follow the pattern of starting with a small cottage, and remodeling to accommodate a larger family. And renting – for example in July when youngsters are in camps – can generate income.

Aside from the ocean as a draw, other factors influence a decision on whether to consider a second home, says Jeffrey Haines, owner of the interior design firm Butler’s of Far Hills, in Far Hills, N.J. “It’s good to have a destination spot for family and friends to come to other than their primary home,” says the nationally-recognized designer. “I find that people tend to extend invitations to their second home that are maybe different from their primary home – extended family, acquaintances, old friends from earlier phases of life – they like to share their special spot.”

Photos Courtesy of Butler’s of Far Hills, Inc. Photography by Laura Moss

Taking a Leap of Faith

Joan and Tim Reil‘s “first” home is in Princeton Junction and their second is in Spring Lake. When deciding on a location for their second home, they took a trip down the Eastern Seaboard, through the Carolinas and down to Florida. They settled on Spring Lake because their grown sons live in New York City, and it’s easier for the family to get together when they are geographically closer.

“We experimented with different towns,” says Joan Reil. “It is important that the off-season be attractive to you, too.”

The empty nesters have one less bedroom in their second home than in their four-bedroom Princeton-area home. They built a swimming pool at their new home and remodeled the late 1970s ranch house to achieve an open look. The kitchen, dining room, and living rooms create a large space, and furniture can easily be rearranged there. A downstairs bedroom can transition to a study. “It’s still in progress, it’s taken a good year,” says Joan Reil, a teacher in the West Windsor-Plainsboro Regional School District.

For others considering a second home, she suggests first renting in the community they are most interested in. “Take the leap of faith – you never know,” she says. “Key is having a patient and personal realtor, and talking to a financial person. There are lots of ways to finance.”

State of the State

The second home or vacation home market in New Jersey “has been and continues to be an important part of the very important tourism industry,” says Peter S. Reinhart, an attorney who is director of the Kislak Real Estate Institute at Monmouth University. The Institute is a research center and database on real estate and economic development for the region.

There are challenges within the state, says Reinhart, who is Monmouth University’s NJAR/Greenbaum/Ferguson Professor of Real Estate Policy. “Following Superstorm Sandy in 2012, the vacation home market took some time to recover as the repairs and rebuilding worked through the permitting process and financial recovery,” he says. “Production of new homes was severely hit during and following the economic recession.”

Although new home building has gradually increased since 2011, much as been in the state’s urban areas. “The Jersey Shore however will continue to be a major tourism and vacation destination,” says Reinhart. Those who pick New Jersey as a vacation spot may be coming from all the way across the country and will need to travel for a long time, so to cut down on the travel time, they might want to look into jet fractional ownership so they can fly themselves to this destination in style and start their vacation off on the right foot.

The traditional shore areas, he says, have gradually picked up. And as baby boomers age, “a number of them are buying second homes in more urban areas rather than beach homes.”

One of the biggest concerns will be how changes in the federal tax laws adopted in late 2017 will impact the housing market in New Jersey, he points out, explaining that recent tax law changes lowered the amount of a mortgage deduction from $1 million to $750,000 for new mortgages for both primary and second homes. “The biggest concern is the $10,000 limit on state and local property and income taxes (SALT) that can be deducted. This will effectively increase the cost of owning second homes. New Jersey has also been in competition with southern states like Florida and the Carolinas for second homes, where taxes are lower,” he notes. However, the idea of a second home might be tempting when it comes to enjoying a vacation. In the places where tax is higher, home buyers might need to explore different options other than conventional bank loans. Borrowing money from private lenders could be an option to consider. There are a lot of money lenders in the market today who provide a mortgage for numerous purposes. So, it might be a wiser decision to compare different options before obtaining the mortgage amount. Mortgage brokers could help in selecting the best plans, and a visit to their website such as certifiedmortgagebroker.com, or similar ones could be of assistance in getting a loan for a new home.

“As with all real estate markets, the one constant is change,” says Reinhart. “Sellers, buyers, and renters will adapt their behavior to these changing market conditions. One important constant is the wonderful vacations at the Jersey Shore. There will continue to be generations of families who create memories of their Jersey Shore vacations, no matter the type of dwelling.”

But those thinking about second homes are not limiting themselves to New Jersey, says Haines. The firm’s clients interested in second homes are attracted to Nantucket, Mass.; the East and West Coasts of Florida; and the Carolinas, particularly Charleston, N.C., or Palmetto Bluffs, S.C. “Each of these places embodies such a unique character,” he explains. “Most recently I worked with a client on their new secondary home, which is an Upper West Side getaway apartment – so it isn’t always about the beach or warm locations. Sometimes it’s about having a place that gives them access to their cultural interests, city living, and extended circles of friends.”

Zillow, the online real estate database, in its May research, reported that Ocean City, N.J. has the largest share of second homes – half of all homes (more than other East Coast areas) are used for seasonal, recreational, or occasional use, according to the U.S. Census Bureau. On the East Coast, the other areas with the most second or seasonal homes are Cape Cod, Mass.; Morehead City, N.C.; Salisbury, Md.; Naples, Fla.; Key West, Fla.; Fort Myers, Fla.; and Myrtle Beach, S.C. All make the top 10 list for most vacation homes.

Photos Courtesy of Butler’s of Far Hills, Inc. Photography by Laura Moss

What to think about

For those lucky enough to find a lot or a house, architect Kevin Wilkes of Princeton Design Guild has some ideas for building or remodeling.

Wilkes, AIA, an award-winning Princeton architect, founded Princeton Design Guild in 1985 with the mission of connecting the architect and general contractor for an integrated design and build team approach.

With homeowners choosing between waterside or mountain ski retreats, “we see more oceanfront, for watersport vacations,” he notes. “The shoreline offers multiple price points, from high end to medium affordable.” Most homeowners also tend to opt for timeshare options in such exotic locations where they can share it with other people. However, the problem with this option begins when it becomes difficult for them get themselves out of this deal. They might either sell it to another potentially interested party or reach out to timeshare exit companies to help them get out of the deal.

“In a town with a lot of available real estate, building a new home is feasible,” says Wilkes. “But in built-up towns, there are few available empty lots, so we look for existing structures. We always try to see if we can salvage some element because there are cost and permitting benefits to remodeling rather than building a brand-new building.”

Remodeling can make approvals easier. “You can capture the latent value of an existing building. Water and electrical utilities could already be run to an existing basement, so you have $10,000 of improvements in place,” he points out.

A vacation home needs storage – for sports equipment, a kayak, camping gear, tennis rackets, bikes, and so on. The storage should be at ground level, so one doesn’t have to keep carrying equipment upstairs. You can use cupboards, hanging shelves, racks, metal hangers, and other storage solutions in a garage or basement to keep the vacation house clutter-free. For the installation of these storage units, you can take the assistance of a professional, or if it is a DIY project, you can use adhesives and products like Sugru Glue to fix and organize everything.

Think about your personal storage. “You may not need enormous walk-in closets because perhaps you are only taking weekend clothes,” says Wilkes. “You might be able to trim personal storage areas.” Bedrooms may not be as large. “Can the kids double up? They may not need desks for homework during the times you will be at the vacation house.”

Along with enough storage, appliances installed in the home need to function properly. Walls, roofs, doors, and windows are also required to be in good conditions. Any repair work of non-functional machines and broken roofs need to be done before moving to your second home for a vacation. As compared to broken appliances, roof repair work often takes more time. It would be beneficial to contact and hire a flat roof repair company before you arrive at your second home. Losing your valuable days of holidays due to roof repair work might not be a good idea.

In the whole house, kitchens usually are the primary focus. “That doesn’t really change,” says Wilkes. “They can open out to the landscape for engaged outdoor entertaining or they can take advantage of dynamic views. For oceanfront clients, sometimes we invert tradition and move the main family living level, which includes the kitchen, to the top floor. If you raise your eye level from 10 to 30 feet, you can see an additional 2.7 miles out to sea. With options such as elevators and garbage chutes, top-floor living can be made convenient.”

“One thing we consider with clients,” he notes, “is the potential for renting out a vacation home to help defray the costs of maintaining them. Many rent out their Jersey Shore homes for part of the summer, so it helps to make provisions to store their personal possessions and to have special storage for towels and linens for renters.”

Codes have become stricter for good reason. For example, windows have to be able to survive wind impacts of flying objects; flood zone requirements are pushing homes higher up in elevation. “At the end of the day, the architect is primarily responsible for compliance,” Wilkes says.

“More and more people and agents come to us early during a real estate purchase process,” Wilkes says. “Approvals for land use are more difficult these days, and builders/architects are experts. There are more environmental and energy regulations, since the 1970s, when the building code was a modest paperback. Now, I have two three-foot-long bookshelves packed with code books.”

For interior design, dwellers in second homes, notes Haines, “want easy maintenance. They won’t be there all the time and they don’t want to think too much about its care. So this is considered in the material selections, finish selections, and fabric selections. I find the style is often the same or similar to the primary home, however maybe the color palette is different – more calming or maybe more bold – or the accessories and artwork are more specific to the locale. The décor often centers around the time of the year that they plan to use the home – geared towards a certain season. For example, we wouldn’t want to use heavy fabric in hot or humid climates, the same with colors.

“For a secondary home, we can design more for a season rather than year-round, however, we have to remember than many clients will use their secondary homes for holiday celebrations so it has to also be comfortable year-round. “

In general, offers Haines, “be ready for spontaneous guests – sleeping, eating, entertaining.”

Photos Courtesy of Butler’s of Far Hills, Inc. Photography by Laura Moss

The Vacation Home as Home

When choosing a realtor, choose one who knows the community, suggests Napp. “You want someone who brings you into the community, someone local. We can all fall in love with a house, but you have to fall in love with a community, too. And renters turn into buyers.”

“Don’t forget costs such as homeowner’s association dues, cable TV and internet, and travel costs,” she says. “And some lender fine print prohibits rentals. Local real estate agents know the nuances of local regulations and costs.”

What the Reils like, says Joan, is that their town is not a one-season town. “There is something going on all year, an active community with a convenient train station – that was a real draw.”

“When we get there, we instantly feel like we are on vacation,” she says. “We feel like that IS our home.”