Andrew Viola had been renting a summer house in Rehoboth Beach for nearly 20 years when he saw a for sale sign while out for a run. Viola, a 56-year-old McLean real-estate developer, thought the Nantucket-style, five-bedroom oceanfront home was way overpriced.
Ten months later, the house still sat on the market, and Viola bought it for about 25 percent below the initial asking price. “I was ready to buy,” he says, “and as the gods would have it, the market had gone in my favor.”
As Viola discovered, the hot market for waterfront properties has cooled in the past year. Rehoboth, Ocean City, Annapolis, North Carolina’s Outer Banks—places where “irrational exuberance” drove prices sky-high—are regaining a sense of normality. You’re not likely to find a steal because houses on the water remain a premium buy. But savvy buyers will find that the tide has turned in their favor.
In Annapolis, nearly 100 waterfront homes were listed for sale between January and May this year—up by one-third from two years ago, according to Barbara Tower of Coldwell Banker in Annapolis.
Long & Foster waterfront agent Charlie Buckley says he has seen Anne Arundel County prices drop by about 10 percent in the past year. “We’re selling more units because buyers realize these are the lowest prices they’re going to see for years to come,” he says.
Outer Banks real-estate agents say many of the traditional, larger oceanfront homes aren’t appreciating and are taking longer to sell. “As for whether we’ve hit the bottom or not, we don’t know,” says John Bone, president of the Outer Banks Chamber of Commerce. “And when we hit it, we won’t know.”
Real-estate brokers and economic-development experts warn that the waterfront market is no buyer’s paradise. Oceanfront single-family homes on the Delaware shore range from $2.2 million to more than $10 million.
Because it’s close to cities and boasts very low property taxes. Rehoboth remains a popular second-home destination.
Sales manager Amy Warick with Rehoboth’s Debbie Reed Team Re/Max Realty Group says, “Our market is becoming more sophisticated, well beyond restaurants and shops. We’ve seen an increase in cultural things: There are theater groups in the area, film societies, and jazz festivals. We see it only getting better.”
In Annapolis, waterfront properties typically range from $500,000 to $6 million, according to Buckley. Mike Miron, director of economic development in Annapolis, says values are consistently strong, particularly because of the limited supply of waterfront residencies. Laws passed in the late 1980s prohibit residential development along most of the waterfront within the city.
Says Miron: “There was a character we wanted to maintain. We gave up large-scale residential and commercial development along the waterfront, and we’re a much happier city for it.”
Even if buyers still face some sticker shock, the softening market is bringing a sense of calm to the hunt. Says Cornelia Heckenbach, an agent in the Eastern Shore’s Talbot County: “The buyers are more critical now. They’re more savvy. They’re well educated on prices. They’re not willing to buy something just because they’re afraid someone else will snatch it up.”
Some who want to be near the ocean but don’t want to pay oceanfront prices are looking at homes a few lots back from the water, where prices can drop by $500,000, according to Warick. Other buyers are looking at properties on bays, creeks, and rivers. Bayfront homes can go for half the price of those on the ocean.
Alan Barbour, a retired airline pilot, recently bought a six-bedroom canalfront home south of Bethany Beach that has views of the Little Assawoman Bay. The house spent four months on the market and sold for 13 percent less than the asking price.
Barbour—whose grown children live in Washington, Pennsylvania, and Boston—wanted a place for his family to gather in the summer to fish, kayak, and, as he puts it, “go crabbing in the backyard.”
“We can easily go to the areas that have the action like Rehoboth but still be in a quiet beach community,” Barbour says.
Homes in his community of Bay View Park range from $800,000 to $2 million, according to Leslie Kopp, an agent with Long & Foster in Bethany.
Arlington lawyers Brian and Julia McCalmon were taken with the Eastern Shore after celebrating their anniversary there. Says Brian: “A couple of years ago, we talked about it, and prices seemed very, very high. More recently, we remarked that we could buy a lot more for the same amount of money. Neither of us is a real-estate speculator, but it was noticeable.”
Last November, the couple bought a five-bedroom Cape Cod on Shipshead Creek, off the Tred Avon River. What was supposed to be a summer home quickly became their weekend getaway. Brian and Julia enjoy the many restaurants in Easton, and their kids—Joe, seven, and Ben, four—get a taste of small-town living by visiting spots such as the 1920s soda fountain at Hill’s Drug Store.
Before visiting the shore, Joe marveled at the sight of a duck. Now there’s a bald eagle just across the creek he’s nicknamed “President.”
A rendering of one of Ocean City’s new condo projects, the Gateway Grand, where prices start at $1 million.
Photograph courtesy of the Gateway Grand
What’s New on the Water
The condo wave that washed over Washington in recent years has hit the nearby waterfront markets.
The Outer Banks is seeing its first oceanfront condo projects in 20 years. Scheduled to open in December, First Flight Retreat (800-344-4892 ext. 226; firstflightretreatcondominiums.com) is set on 255 feet of beach and includes an oceanfront pool, fitness center, and beach access.
About half of the 45 units, in Kill Devil Hills, have been sold. “Not everyone wants to vacation with their extended families,” says Jeff Fabrikant of Carolina Resort Group, the developer. “The rental people are starving for a product like this.”
One-bedroom apartments are going for $400,000 to $455,000, two bedrooms for $550,000 to $650,000.
The Croatan Surf Club (877-427-6282; croatansurfclub.com), another oceanfront development in the works in Kill Devil Hills, will have 36 two- and three-bedroom units with private terraces. Indoor and outdoor pools are planned as well as a fitness center. Units will range from $550,000 to $1 million.
A new oceanfront condo project in Ocean City is the Gateway Grand (800-400-6275; thegatewaygrand.com), a development by Trammell Crow in partnership with the Carlyle Group. Amenities include a private beach and indoor/outdoor pools. Condo owners get discounts at Lighthouse Sound, rated among the top 100 public golf courses by Golf magazine. The three- and four-bedroom units start at $1 million.
Washington developer Buccini/Pollin Group is building luxury condominiums on Ocean City’s bay side. The Rivendell (888-574-8363; rivendellcondos.com) will include 88 two-, three-, and four-bedroom units with granite countertops and stainless-steel appliances. The building will have a bayfront restaurant, an indoor/outdoor pool, and a fitness center. Prices start at $599,000.