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Atlantic City: Real Estate and Market Trends

There is really no way around it: the Atlantic City real estate market was one of the worst hit during the recession. On top of a shrinking economy, the collapse of the casino sector was enough to drive the city into a financial crisis on par with Detroit. However, nearly a decade removed from the start of the recession, the gaming industry in Atlantic City is still afloat. Two-thirds of the casinos remain, and they still provide high levels of entertainment, restaurants and gaming. While the area has seen better times, it has enormous economic potential. That said, Atlantic City real estate investing will play a critical role in rejuvenating the entire metropolitan area.

Again, the Atlantic City real estate market has seen better days. It is one of the few markets in which home values actually dropped over the last 12 months. Homes have actually depreciated at a rate of 3.3 percent. While that rate is better than three years ago, it is a far cry from the national average. Accordingly, homes across the country have appreciated by as much as 5.7 percent over the course of a year. Of course, the drop in prices makes the Atlantic City housing market more affordable.

The current median home price is $210,100; slightly above the national average. Atlantic City real estate investing should see a number of deals come its way that offer attractive spreads. At this point, regardless of where the market is, it is important to remember that there is always a viable and lucrative option for investing strategies. Despite the predicament the city finds itself in, Atlantic City real estate investing will push forward.

Atlantic City boardwalk

The Atlantic City housing market has not seen the same return in equity that most other markets across the country have. The following highlights how much equity has been gained relative to the year of the home’s purchase:

  • Homes purchased in the Atlantic City housing market one year ago have depreciated, on average, by $3,788. The national average increased $14,170 over the same period.
  • Homes purchased in the Atlantic City housing market three years ago have appreciated, on average, by a modest $539. The national average saw an increase of $53,857 over the same period.
  • Homes purchased in the Atlantic City housing market five years ago have appreciated, on average, by $4,273. The national average was $48,036 over the same period.
  • Homes purchased in the Atlantic City housing market seven years ago have depreciated, on average, by $42,939. The national average increased $13,870 over the same period.
  • Homes purchased in the Atlantic City housing market nine years ago have depreciated, on average, by $25,542. The national average also dropped $2,822 over the same period.

The Atlantic City housing market is severely lacking in fundamentals. With an unemployment rate of 11.3 percent, those without a job in Atlantic City nearly double the national average. That said, job losses are a significant problem and will continue to weigh on demand. Nonetheless, layoffs are starting to decline, which could actually provide a glimmer of hope for buyer confidence.

While the Atlantic City housing market has seen better days, it does have one fundamental indicator working in its favor: affordability. In fact, the area’s affordability is historically strong and improving. Atlantic City homeowners now spend about 10.7 percent of their income on monthly mortgage payments, compared to 15.1 percent that is the national average. That said, the Atlantic City housing market is one of the most affordable markets in the country.

Affordability will continue to benefit Atlantic City real estate investing. In particular, investors will find that most of the profitable deals come from distressed homes. According to RealtyTrac, there are about 639 foreclosures within the Atlantic City limits. That is to say, each of these distressed properties are either at risk of being repossessed, have already been repossessed, or are scheduled to be placed up for auction. Regardless of the scenario, these homes should become a focal point of Atlantic City real estate investing. On top of that, today’s distressed properties are a staggering 103 percent higher than they were at this time last year. However, the good news for Atlantic City real estate investing doesn’t stop there. These homes all offer discounts that can increase spreads.

The average, non-distressed home in Atlantic City has a median sales price of $66,000. However, those of a distressed nature have an average sales price of $59,000. For those keeping track, that is an 11 percent discount, or about $7,000 per property.

With the state of the Atlantic City housing market being what it is, it should come at no surprise that most of the area’s foreclosures are actually pre-foreclosures. In fact, 62.3 percent of homeowners in the area are at risk of losing their property because of a failure to pay off mortgage obligations. Another 24.6 percent of the foreclosures are going to be sold at auction. The remaining 13.1 percent are sitting on the books of banks as non-preforming loans. It just so happens that each of these scenarios works in favor of Atlantic City real estate investing.

It would be difficult to discuss the state of the Atlantic city housing market without binging up its past. Yes – the city is facing a financial crisis, and the recession did nothing to improve its standings in the economy. However, historically high affordability should continue to attract the attention of buyers. Truth be told, it is only a matter of time till this city unlocks its true potential. Now may be the best time to get into Atlantic City real estate investing.

Atlantic City Housing Market Summary:

  • Current Median Home Price: $210,000
  • 1-Year Appreciation Rate: -3.3%
  • Unemployment Rate: 11.3%
  • Population: 39,551
  • Median Household Income: $52,127

Atlantic City County Map:

Map of Atlantic City area

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