COURT HOUSE – Housing prices in Cape May County have risen for nine consecutive years, although at a slower rate over the last calendar year, the Cape May County Chamber of Commerce was told at a recent luncheon.
Oliver Cooke, associate professor of economics at Stockton University, spoke about housing prices and other economic indicators during his presentation at the chamber’s membership luncheon on Thursday, Jan. 18.
Cooke said housing prices went up about 6.2% from 2022 to 2023, a bit less than New Jersey overall, which saw a 7.8% increase. According to the graphs he included in his presentation, home prices increased 231.5% between 2000 and 2006, and 268% between 2006 and 2023. He said a home that sold for $150,000 in 2000 sold for $550,000 in 2023.
Cooke said housing markets cooled considerably over the last year due to high prices, high mortgage rates and tight inventory. While the shore real estate market seems to show some resiliency and grew during the Covid pandemic, he said, “I do not believe Cape May’s housing market is necessarily immune from broader forces affecting the national housing market – in particular, higher mortgage interest rates.
“Single-family home prices in Cape May declined during the national housing bust of 2006. As I point out, single-family home prices in Cape May declined 22% between 2006 and 2014 before stabilizing. By way of comparison, they declined about 25% nationally between 2006 and 2011.”
Cooke said that there are people who are still holding onto historically low mortgage rates. He said he would not be surprised if mortgage rates continued to stay high for the first part of 2024.
He told the chamber members that the regional economy, including the Ocean City Metropolitan Area, which includes Cape May County, will be tightly linked to the national economy. He said the housing market and the “staying power of consumers” were keys to the regional economy.
“The regional economy is highly dependent upon its ‘export’ of a ‘summer shore vacation commodity,’” Cooke wrote in a response to a Herald question. “Summer vacation spending is in turn highly dependent upon the health of consumers/households. Of course, if there is a major wildcard event (e.g., a financial or geopolitical crisis) then all bets are off.”
Cooke told the chamber the “million-dollar question” is, will the U.S. economy realize a “soft landing” in 2024? He explained via email that the term “soft landing” refers to a situation in which inflation continues to ease while the economy avoids recession.
“This is the ideal that the Federal Reserve has been aiming for since it began its inflation fight in March 2022,” he wrote.
Cooke said in his presentation that inflation has slowed significantly since summer 2022. He said that, in December, core inflation fell below 4% for the first time since May 2021. He said the Fed’s interest rate policy remains the subject of debate despite a December signal that rate cuts could be on the horizon.
Much of the economic forecast for 2024 is developed on what happened the prior year. Cooke reported that the Gross Domestic Product grew 4.9% in the third quarter of 2023, which was the seventh-fastest since 1999 excluding the post-Covid rebound.
He said job gains averaged 225,000 per month in 2023, which was the fourth-best since 1999, again excluding the post-Covid rebound. Unemployment, he said, was 3.7%. By comparison, it was 3.5% in February 2020. Cooke said the labor force recovered in May 2022 from its lowest point, in August 2020.
Holiday retail sales in 2023, he said, were better than expected and were up 3.1% from 2022. Equity markets, he said, were up 24% in 2023, finishing the year with a surge. Auto sales were up 12% in 2023, with 15.5 million cars being sold nationally.
The Ocean City Metropolitan Area economy grew for the third straight year, Cooke said. The region added 2,700 jobs in 2023 after a loss of 5,100 jobs due to Covid. Employment grew to 45,800 jobs as compared to a pre-pandemic level of 43,300.
Leisure and hospitality employment increased by 2,200 jobs, with nearly all of them being in accommodations, restaurants and bars. Collectively, amusements/theme parks, museums, theaters, marinas, golf courses and zoos added 1,800 jobs. The leisure and hospitality market accounts for 33% of all jobs in the region.
At the same time, employment in the retail sector fell by almost 400 jobs, a 5.3% decline, and remains below pre-pandemic levels. Government jobs increased by 300, a 4.4% jump, rising to just shy of pre-pandemic levels.
As to summer 2024, Cooke said, “The 2024 summer shore season in South Jersey will hinge on the continued health of the regional labor market, which is to say the staying power of consumers.”
Contact the author, Christopher South, at csouth@cmcherald.com or 609-886-8600, ext. 128.
