Jersey Shore rental market sees cancellations, dropped prices, vacant weeks. What’s going on?

Is the “Shore crowd in Italy”? Again?

That’s the buzz, or rationalization, among some renters, real estate agents and homeowners at the Jersey Shore, who are seeing another summer of vacant weeks, price drops, and a rising chorus of people who say they can go to other destinations — Aruba, North Carolina, Italy — for less money than they’re being asked to pay Down the Shore.

And in those far-flung places, they don’t have to bring their own sheets and toilet paper, a time-honored practice at many Jersey Shore rental properties.

The cracks began to show last summer.

And the panic is setting in even earlier this season, with owners offering discounted weeks, incentives for last-minute bookings, and tossing out long-standing practices, like requiring renters to book Saturday to Saturday.

Facebook groups like Main Liners Shore House Rentals are filled with properties with vacancies, like the Avalon house that sleeps 10 asking weekly rates ranging from $5,250 in July to $3,000 in September. Or the Ventnor house that sleeps 12 and is now asking $7,600 a week (”just added — 6 seater golf cart and 2 paddle boards!”).

After a couple years of heady economics — with the pandemic sending people to the Shore in droves, buying up real estate, moving here year-round, and forgoing fancier vacations — reality is continuing to set in by the beach.

“I’ll tell you that there was a lot of inventory that went unrented for people asking $30,000 a month for houses that are only worth $20,000 a month,” said Cole Checkoff, who runs a short-term rental management website, Host House Rentals, in the Atlantic City to Ocean City area.

“That put me in a good position,” he said. “I slice up the calendar a little bit more, [offering rentals for a week or less]. Things have been booking more last-minute. The booking window has been reduced over the last couple of summers.”

Rental properties are vacant during prime weeks, and real estate websites are showing pages of discounted properties. This summer, it pays to play the waiting game.

Keith D’Amore has owned a rental property in Ocean City, and said this was the first year he’s had two weeks open heading into prime summer season. Listing with Berger Realty, he said he’s discussed a new “30-day-out discount plan” where rental prices automatically drop when a week is open within the 30-day window.

“So if people can do a ‘standby,’ they can get a pretty good discount on a week’s rental,” D’Amore noted in an email. “It would be a good opportunity for some families that are getting priced out of a NJ vacation.”

Tara Cruser-Moss, a real estate agent at Berger, said, “We definitely have some openings.”

Berger’s page of discounted Shore weekly rental openings, currently at 97 properties, range from $1,600 for a two-bedroom on 39th Street (down from $1,800) to $10,000 for a four-bedroom fronting the boardwalk (down from $11,500). Both are in Ocean City.

“The world changed back to what it used to be,” Cruser-Moss said. ”Internationally, people have the options they didn’t have three years ago.”

While Shore locals are not shooting water guns and shouting at tourists like they are in tourist-bloated Barcelona, some of the same dynamics are at play.

By some measures, the damage may have already been done.

With the pandemic buying spree, property values have ballooned to the point where a typical family can no longer afford a house in some of the Shore towns that have always nurtured robust local communities. School enrollments have plummeted.

Will families of more modest means be able to reclaim the Jersey Shore? Or is it lost to all but the wealthiest? Some real estate agents say a correction may be on the horizon.

People who bought at high prices and high interest rates, assuming they could make money on rentals without much effort, are having a reality check.

“The places that aren’t nice, that don’t have the amenities, that have shady pictures on their listings, those will go away,” Checkoff predicted. “They’ll go back to yearly rentals. There is an extraordinary large demand for yearly rentals down here.”

One recent investment property buyer in Sea Isle, who did not want to be identified, raised his rents this year to help cover his mortgage, and said he’s been surprised at the difficulty in filling out a full season this summer.

“Last summer, I had the whole place rented,” he said. “People were reaching out left and right. I upped my rates slightly, the highest at $3,500 to $3,750. It’s a lot of work. I’m not making a lot of profit. I thought I’d have just an easier time filling it.”

Maria Sacco Handle, a real estate agent in Brigantine and head of its Chamber of Commerce, has been counseling her clients since before the summer, when their rental bookings were 60% off.

The advice includes reducing minimum stays to three nights and lowering weekly rental prices by 20%.

She also suggested including linens and towels and allowing pets, considering year-round tenants, and, as a last resort, selling.

“Given the sluggish rental market contrasted with a thriving sales market, it may be worth considering selling your property,” Handle wrote in the email to the owners of the rentals she manages. “We suggest evaluating this option sooner rather than later to avoid potential oversaturation in the market.”

Handle said in an interview that she’s seeing an uptick on people returning recent home purchases to the market in oversaturated Brigantine.

“A lot of people thought they wanted to be Airbnb owners,” she said. Brigantine doesn’t have the shoulder seasons that some of the other Shore towns do, she noted, adding to the glut of inventory in a shorter time frame.

In 2019, there were 500 rentals on the island, she said. Now there are 950 registered rentals.

“We’re telling them to cut the prices down,” she said. “Add in all the additional amenities. Include the linens. At the end of the day, it’s ‘I can take my whole family on a cruise for the same amount as the Shore, and food is included.’”

One Montgomery County mom said she was quoted $36,000 for four weeks for a five-bedroom, two-bath house in a “war zone,” a Sea Isle City street where the bars let out.

“So we are heading to Italy for two weeks for less than half the price,” she said in a Facebook message. She did not want her family’s name published.

She, like many, are skeptical about all the postings about “last-minute cancellations,” and believes the owners are just trying to attract renters to vacant weeks. “No one is canceling last-minute,” she said. “That’s breaking a contract. Places are so overpriced.”

The high prices have deterred a lot of people, Handle said, and there are few, if any, year-round rentals available.

As for sales, “We’re already seeing sales prices coming down.”

A home now averages 76 days on the market, up from 40. In January, there were one to two homes a week coming up for sale; “now we’re seeing two to three a day,” she said.

Handle is listing one prime beachfront rental property that is sitting empty in July. Its original weekly price of $10,000 has been reduced to $4,900; (a late start due to renovations also contributed to its vacancies).

Giulia Umile owns an investment property in Cape May, an 800-square-foot two-bedroom townhouse she rents for $300 a night. She has a 78% occupancy rate for the year. “That’s pretty high,” she said. “I have zero availability from May to October.”

Similar properties are trying to get $500 a night, she said.

“I think a lot of people tried to get into the Airbnb game with no experience in real estate, without doing any research,” she said. “They’re either priced way too high or went too far out of the area. They’ll post Cape May, but it’s really North Cape May. With today’s mortgage rates, it’s really difficult to make it work as a rental.”

She has a three-night minimum, allows pets, has an outdoor shower, and keeps fees down, she says. “I don’t overprice. It’s worked out very well,” she said.

(Over in Avalon, she said, her family owns a property that rents for $30,000 a week and is going strong with repeat customers.)

“It’s a pretty global topic,” Umile observed. “In Spain, residents are going out and harassing tourists sitting at outdoor cafés, shooting with water guns. All the housing was purchased by investors and locals can no longer afford to live there. It’s a double-edged sword. Every day, I see a post from a local that has no housing. We topped out too quickly.”