CAPE MAY— The housing crisis in New Jersey is by no means new, but it persists with limited solutions. Throughout the state, there remains a dearth of affordable, year-round rental homes.
In a town where seasonal rentals are more common than yearly rentals, Susan Kennedy-Burgos bucked the ongoing trend and decided to convert one of her seasonal rentals into a year-round rental.
She owns and operates The Shell Cottages, which now consists of four full-time rentals, two vacation rentals and hospitality services for another vacation rental on Cape Island.
“I have been aware of the growing need for year-round housing in Cape May County for several years now,” Kennedy-Burgos said, adding that she is often asked if she has a home available for year-round or winter rentals or whether she knows of anything available.
A friend and fellow investment property owner told Kennedy-Burgos he was selling a property in Villas and wanted to help find his tenant a new place. Kennedy-Burgos had been considering renting her one-bedroom Millman house full time.
“She had rented from him for five years, so she came highly recommended,” Kennedy-Burgos said. “When I met her, I decided it was the right move for both of us.”
Cost of living
In addition to the limited year-round housing available, having a salary that aligns with rental coast is another problematic aspect of life in Cape May County.
“Typical salaries in the area have certainly not kept up with this increase,” Kennedy-Burgos said. “All of our full-time rentals are currently below what the market says we should be getting, because our tenants, who have good, year-round local jobs, cannot afford the market rates.”
Renting over buying a home is often necessary for those wishing to live in the county. According to Zillow, the average Cape May home is priced at $696,637, up 1.4 percent over the past year.
For landlords, there are many benefits to renting year-round rather than seasonally. One is that tenants pay utilities. Kennedy-Burgos said tenants tend to be more cognizant of how much energy they are using, and generally want maintenance addressed right away.
“[Compared] to a short-term renter who may blast the AC and fail to report a running toilet because they don’t want to be bothered with a repair during their vacation,” she said.
While short-term rentals allow landlords to check in on their properties weekly, year-round rentals do not. Kennedy-Burgos notes that for good, full-time tenants, that is not a concern.
“From a landlord point of view, there is generally less work involved in a year-round rental,” Kennedy-Burgos said. “No weekly turnovers, tenants usually pay the utilities and there is reliable income.”
As competition among short-term rentals grows, renting full-time can be comparable or even slightly more profitable, Kennedy-Burgos said.
“Also, if you can afford it, why not invest in your community?” Kennedy-Burgos said.
Second home buyers
There is no denying that the COVID-19 pandemic in 2020-21 changed the housing market in Cape May County, with people flocking to the beach to escape the city, especially as remote work became more common.
But DeSatnick Real Estate agent Ryan Griffin said he does not believe the year-round housing shortage was solely a product of the pandemic boom.
“This [issue] went on years prior; we saw investors selling off their year-round rentals prior as the market grew considerably from 2010,” Griffin said. “A lot of what we have seen over the years has been second home buyers.”
Griffin added that a percentage of second homeowners opt to rent, and the boom a few years ago accentuated that, making it more challenging for full-time residents to secure properties.
“There are investors that are specifically seeking short-term rentals in the area as a result,” he said. “With that, a shift is happening. We are seeing some properties that had an impressive rent roll over 2020-23 showing less at year end.”
These rentals tend to be the ones on the outskirts of where short-term tenants would traditionally target. As a result, it has caused some investors to switch over to year-round rentals, with some opting to sell, Griffin added.
“My personal long-term rentals could very easily be short-term, but I see a value in offering residents a place to live,” Griffin said. “I am appreciative for every rent check that comes in. We can’t fault people for wanting to be here, Cape May is a very special area.”
Griffin believes the sales market is still solid, noting that if properties are priced correctly, they will sell quickly — sometimes with multiple bids. He also noted that the Cape May market has shown much more resilience and is overall stronger than the country as a whole.
“I feel fortunate to be in the situation that I am in, but it’s certainly not without work,” he said. “We still have an undersupply of inventory, with an oversupply of buyers.”
Griffin said a noteworthy trend he has noticed in his recent sales is a sizable percentage of buyers planning to relocate to Cape May on a full-time basis in the near future.
“Even with the continued upward movement in the market, it’s obvious that the interest rates have impacted buying power,” he said. “However, the waiting game could backfire … if anyone has that crystal ball, my number is (609) 602-5578.”
Workforce housing
Attracting workers to Cape May is one thing, but housing them is another story.
Cape May recently introduced an amended ordinance to promote a pilot program for workforce and long-term housing opportunities in the C-1 district. The amended ordinance was scheduled for a second reading and final vote Nov. 17.
During an Oct. 21 council meeting, Mayor Zack Mullock said the lack of available housing has been an ongoing issue in Cape May for decades.
The amended ordinance provides opportunities to stores on the Washington Street Mall with upper floors that are vacant because the owners cannot provide parking under the code for anything above the first floor. Typically, second or third floors have been used for storage.
These underutilized spaces in critical areas of the city could potentially provide housing for the area’s workforce. Mullock said the idea is not to charge a high rent to people who are not working in town.
Solicitor Chris Gillin-Schwartz said the workforce housing could allow people to convert spaces with limitations, thereby serving what Cape May is trying to do: bring year-round and long-term residents back to the city, keep them there and give these opportunities new life, rather than leaning toward short-term rentals.
Mullock added that if things are not working during the pilot process, they can be changed.
By RACHEL SHUBIN/Special to the Star and Wave
