Baby boomers bring boom times to the beaches
By Brian Johnson
Staff writer for The Eagle-Tribune
Tina Ostrowski always dreamed of living near the beach. So when her kids went off to college, the Methuen real estate agent sold her house of 20 years in Andover and moved north to Hampton Beach in New Hampshire.
Now, living only a few blocks from the ocean, it's not difficult measuring how happy she is in her new digs. The sign on the front of her Hampton Beach home reads: "Dreams do come true."
Like many of her baby-boom contemporaries approaching their retirement years, Ostrowski, 55, is helping drive up the demand for homes in coastal cities throughout the country. Some buy and permanently resettle; others only are looking for second homes. But whatever the reason, it's boom time anywhere near the ocean right now, and home prices are spiking as the housing stock in those communities struggles to keep pace with the demand.
"There was 77 million people born between 1946 and 1964," said David Hehman, the CEO of Escapehomes.com, an online listing service for vacation homes based in California. "These people (baby boomers) are just hitting their peak buying years. For the next 10 years, you should see similar demand pressure."
It's the same up and down the coast: Anywhere that people can even sniff the sea breeze, prices are soaring. Housing experts estimate the average price of homes in ocean communities has doubled during the past five years.
The North Shore, with its proximity to Boston and comparatively light traffic, is no exception.
"I think it's the great undiscovered," said Marilyn Gilbert, the office manager for Vernon Martin Realty's office in Topsfield. Gilbert, who owns a house in Ipswich, said that prices in her beach community have increased dramatically.
For example, Gilbert said she has seen seasonal homes in the Great Neck section of Ipswich sell for $600,000 to $800,000, only to be torn down to make way for larger year-round residences.
The number of available properties in Great Neck is relatively scarce because of the large amount of marsh lands in the area. Many beach communities similarly have strict zoning laws that bar overdevelopment, further limiting the number of spots to purchase.
But demand for homes in Ipswich and other coastal towns also is increasing, Gilbert said, driven in part by now-aging boomers who spent summers there as children in the 1950s and '60s.
"Those houses are passed down from generation to generation," Gilbert said. "The children who grew up down there want to buy, too. There's an emotional tie to that little drumlin."
Another factor pushing up housing prices — not only near the beach but almost everywhere — has been the lengthy investment trend favoring real estate over the stock market.
But Hehman points out that there's more to beach living than just sunshine and sand. Exterior maintenance is a necessity because of the increased exposure to the elements. Home insurance premiums also are sharply higher than in other areas, especially in coastal communities susceptible to hurricanes or winter nor'easters.
"Just talk to anybody who bought in Pensacola, Fla., last year," Hehman said. "They were devastated."
In some parts of New England, prices have already climbed so much for coastal properties that the prices seem out of reach for all but the wealthiest buyers.
Keith Bradley, a regional vice president for the Massachusetts Association of Realtors, said the average price of a single-family home on Cape Cod has jumped 57 percent since 2000 to $482,000.
However, those numbers include all homes on the Cape, not just those near the water. It also doesn't count houses valued over $1 million — which, in tiny enclaves such as Chatam, where Bradley lives, takes in almost all of the properties in town.
Bradley said that people looking for a classic grass-and-oceanside backyard typically will pay $3 million for the privilege and that some properties can sell for as much as $8 million. That's contributing to a critical shortage in affordable housing on Cape Cod, he said, adding that many would-be buyers are now looking to the South Shore, Rhode Island or even Florida for less costly accommodations.
But Bradley also believes that not even hurricanes or high prices can steer home buyers away from the shore.
"Beach homes have always been in demand," he said. "Being by the water just seems like a primal urge."