Dear Ralph,

Purchasing vacation rentals is an attractive way to invest in the New Jersey real estate market. Another interest metric is the fact that the average age for a first-time buyer in New Jersey hit 45. There are a number of factors affecting this, all of which are worth addressing. And finally, the great San Francisco Centre (Mall) is closed and in receivership due to rampant 'smash and grab' shoplifters threatening the retail industry as we know it.

Please feel free to email me at ralph@counsellorstitle.com if you have any questions or would like to follow up on any of this edition's articles.

Ralph Aponte

Founder & President

732.914.1400

Feel free to book a call to discover how we can serve your needs.



Investing in NJ Vacation Rentals

by Anthony DiMaio

New Jersey offers prime real estate opportunities for those looking to invest in vacation rentals. From the famous shorelines of the Jersey Shore to the serene mountain retreats near the Delaware Water Gap, New Jersey’s diversity in landscapes and tourist attractions make it an attractive market for short-term rental investors. Let’s take a closer look at New Jersey’s vacation rental market trends, key metrics, top locations, and practical steps to successfully invest in short-term rentals.

New Jersey Market Trends and Investment Outlook

New Jersey’s vacation rental market has remained resilient, even as broader real estate trends face fluctuations. Post-pandemic, travel patterns have shifted, with many opting for domestic getaways, especially in drive-to destinations like the Jersey Shore, Cape May, and the Poconos border areas. This change has bolstered demand for vacation rentals in these regions.

• Occupancy Rates: Short-term rental occupancy rates in popular locations like Cape May and Ocean City have consistently averaged between 60-80% in peak season. Off-season occupancy rates are lower but can be offset with strategic pricing and promotions.

• Nightly Rates: According to local data, nightly rates in hot spots like Long Beach Island and Wildwood Crest range from $200 to $500 in high season, providing substantial revenue potential, especially in multi-family or high-amenity properties.

• Overhead Costs: Investors should be aware of the overhead costs associated with maintaining a short-term rental. This includes property management fees (often 10-30% of rental income), cleaning and maintenance, utility costs, and additional insurance coverage, which can add an average of 20-30% to expenses.

Metrics to Assess When Buying a Vacation Rental

When assessing a vacation rental investment, consider these essential metrics:

1. Occupancy Rate: Higher occupancy rates indicate steady demand. Aim for 60-70% or more during peak seasons.

2. Average Daily Rate (ADR): This is the average revenue generated per night. Look for a competitive ADR, ideally aligning with market data.

3. Seasonality: In New Jersey, seasonal demand is pronounced. Verify that projected annual income accounts for the fluctuation between high and low seasons.

4. Cap Rate: Calculate the capitalization rate (net income divided by the property’s purchase price) to gauge profitability, aiming for a minimum of 8%.

5. RevPAR (Revenue per Available Rental): This metric, commonly used in the hotel industry, helps determine overall revenue potential. To calculate it, multiply the ADR by the occupancy rate.

6. Regulatory Environment: Check for local short-term rental regulations, as New Jersey has different ordinances that may restrict short-term rentals in certain areas.

7. Cost of Ownership: Include HOA fees, utilities, taxes, and management fees to understand the net income potential.

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Average Age for First-Time Buyer is 45

by: Anthony DiMaio

In 2024, the average age of a first-time homebuyer in New Jersey rose to an all-time high of 45, according to Corbelo Law. This marks a significant shift, as rising costs, high competition, and limited inventory make it increasingly difficult for younger New Jerseyans to enter the housing market. Factors such as low housing supply, rising rents, and competition from wealthier buyers are contributing to this trend, pushing the average age of first-time buyers even higher than the national median of 38 years.

Older First-Time Homebuyers: A Growing Trend in New Jersey

New Jersey’s real estate market reflects the larger trend of delayed homeownership but at an even more pronounced rate. While in the 1980s, the typical first-time homebuyer was in their late 20s, today’s buyers are often well into their 40s. The share of first-time homebuyers has also declined, with New Jersey seeing fewer young buyers due to the high cost of entry and limited availability of affordable homes.

New Jersey’s Housing Shortage and Rising Prices

New Jersey’s housing shortage is a primary factor in the delayed entry of first-time buyers. With a persistent gap in new home construction, especially in high-demand areas like Bergen, Essex, and Hudson Counties, home prices continue to climb. Currently, the median price of a starter home in New Jersey stands at about $340,000, much higher than the national average of $250,000. This pricing pressure is compounded by increased demand, as more buyers enter bidding wars, often competing against wealthier or cash buyers.

Cash Buyers Increase Pressure on First-Time Buyers

The presence of cash buyers, many of whom are baby boomers or retirees with significant equity, adds another layer of competition. Around 26% of all home purchases in the U.S. this year were paid in cash, a trend that holds in New Jersey, particularly in desirable locations along the Jersey Shore. These cash offers often make it difficult for younger buyers who rely on mortgages to compete.

High Rent Costs Hinder Savings for New Jersey Renters

For New Jersey renters, high costs continue to be a barrier to homeownership. In cities like Jersey City and Hoboken, rent growth during the pandemic outpaced wage increases, with the average renter spending about 34% of their income on rent. These elevated costs make it challenging for renters to save enough for a down payment, effectively delaying their ability to purchase a home.

Building Activity Shows Limited Improvement

While New Jersey is experiencing a slight increase in building activity, it remains insufficient to meet the high demand for housing. Single-family housing starts have seen a modest rise, particularly in suburban and exurban areas, which aligns with national data showing a 2.7% increase in September 2024. However, the slow pace of new construction continues to restrict housing options for first-time buyers, exacerbating affordability issues.

The Road Ahead for First-Time Homebuyers in New Jersey

With first-time homeownership increasingly delayed, experts anticipate that the trend of older first-time buyers will continue. Addressing the housing supply crisis is essential to providing younger generations with viable entry points into homeownership. Steps such as adjusting zoning regulations, incentivizing affordable housing projects, and encouraging the construction of multi-family units could improve accessibility for aspiring homebuyers in New Jersey.

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Shoplifters Kill San Francisco Mall

by: Anthony DiMaio

While retail theft is on the rise throughout the country, shopping malls, once bustling centers of commerce and community, are left to their own devices in a hostile environment. San Francisco Centre, an iconic mall near the city's Union Square shopping district, has joined a long list of casualties in a retail landscape ravaged by crime and government inaction.

This property was in default for $625.6 million and was foreclosed this week, with the sale date being pushed to Dec. 17. What once was a lively shopping center anchored by the Nordstrom flagship store has been reduced to an empty shell by an exodus of tenants complaining of relentless crime coupled with not enough city authority support. Nordstrom left the property in 2023, as did other big retailers like American Eagle, which sued the mall's ownership over its purported neglect and failure to address the crime problem.

This trend isn’t unique to San Francisco. Across the country, malls are closing their doors due to the unchecked rise of smash-and-grab robberies. Security issues have become so severe that many retailers no longer see operating in certain cities as viable. Without intervention from local governments to protect these spaces, malls are increasingly forced to shoulder the burden of security costs, which many cannot sustain.

In the case of San Francisco Centre, the property's owner surrendered the mall to its lenders last year, unable to recover from economic losses and escalating crime. Since then, a receiver appointed by the court - Trident Pacific - has struggled to impose order. The company has hired security agents and deployed guard dogs at entrances, but the damage is done: major brands have fled, and the mall's financial woes continue to mount.

And even worse is what municipal governments have done: nothing. Shopping malls like the San Francisco Centre provide job opportunities, generate substantial tax revenue, and are crucial anchors for a city's economy. Yet, despite their importance, city governments often did little or nothing to address the crime wave that had taken over these places.

They've repeatedly asked for increased police presence, stricter prosecution of theft-related crimes, and motivation on the part of mall operators to invest in security. Those appeals, by and large, have fallen on deaf ears. And the shopping malls have been largely allowed to fester — their decline fed by a sense of lawlessness and abandonment that keeps shoppers and businesses away from them.

In fact, it has created a huge ripple effect. As there are fewer tenants, the vacancies mount and property values nosedive, affecting the surrounding communities that relied on the malls as important economic drivers. Take the case of San Francisco Centre, where even its rebranding as "Emporium Centre San Francisco" was put on hold.

Unless municipalities take concrete steps and decisive action to safeguard retail spaces against crime, the decline of shopping centers will continue to accelerate and further gut the cores of urban areas, leaving people without jobs, services, and places to gather in public. Unless city leaders rise up and play their part, they can literally watch the retail industry — and with it the rich communities it fosters — disappear altogether.

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About Counsellors Title Agency

We are an award-winning agency and one of New Jersey's leading title insurance businesses, based in Toms River. Counsellors is known for its team of knowledgeable service professionals recognized for its exceptional title, settlement and escrow services, for all 21 New Jersey counties. Its glitch-free signature service provides confidence to home buyers, sellers, and industry professionals. The knowledge base of its staff has processed over $17 billion in orders and established itself as a pillar of trust and benchmark of excellence within the real estate community.