Long Beach Island, an 18-mile barrier island off the coast of New Jersey, is seeing home prices approach $2 million, nearly double what they were just a few years ago. This surge stands out even as many coastal markets across the U.S. face slower sales, rising interest rates, and affordability concerns. The reasons behind Long Beach Island’s resilience reveal how scarcity, evolving buyer profiles, and geographic constraints are shaping the high-end vacation home market today.
Edward Freeman Jr., Managing Partner of The Freeman Group, Owner of Freeman & Company Real Estate, has witnessed these changes up close. His family’s brokerage, which once operated on a small scale, now handles over $200 million in annual sales volume with just four agents, focusing exclusively on Long Beach Island’s unique real estate landscape.
The most significant factor driving Long Beach Island’s market is a severe inventory shortage, a challenge mirrored in other desirable coastal regions. Homes that do become available are quickly absorbed, and prices have climbed steadily as a result. “We’re certainly dealing with very low inventory and continued high prices,” Freeman says. Just a few years ago, the average sales price was under $1 million; now, it’s closer to $2 million.
This shortage largely stems from the “rate lock” effect. Many homeowners secured mortgages at historically low rates during the past decade and are now reluctant to sell, even as their home values have soared. Moving would mean giving up a low monthly payment for a much higher one, even if they have significant equity. For many, the math doesn’t justify a move: selling often means taking on a larger mortgage at a higher rate, which offsets gains from appreciation.
Unlike primary residence markets, Long Beach Island is dominated by second-home and investment buyers, most of whom come from New York City and New Jersey. These buyers are typically seeking vacation properties or rental investments rather than permanent homes.
The pandemic temporarily shifted this dynamic, as remote work allowed more owners to live on the island full-time. But as employers have called workers back to offices, the number of full-time residents has dropped back to pre-pandemic levels. Freeman notes that while some owners stayed during the height of remote work, most have now returned to using their properties seasonally or as weekend getaways.
For builders and investors, soaring land and home prices have made it more difficult to find profitable development opportunities. “With the lack of inventory, it makes it more difficult to find acceptable development projects because the prices have been inflated,” Freeman explains. Builders now face higher acquisition costs and must price new homes at levels that would have seemed unrealistic just a few years ago.
Rising interest rates add another layer of difficulty, especially for those looking at income-generating properties. Investors must evaluate not just the immediate cash flow but the total return, factoring in higher borrowing costs. This environment favors those with the capacity to hold properties longer or to invest more upfront.
While insurance costs have soared in states like Florida and California, Long Beach Island remains relatively affordable in this regard, at least for newer, properly constructed homes. Properties built above the base flood elevation typically see flood insurance premiums between $1,200 and $2,000 annually, thanks to federal subsidies and favorable local ratings.
However, older homes that sit below current elevation standards face higher premiums. Buyers of these properties must choose whether to pay more for insurance, invest in raising the home, or rebuild entirely to meet modern requirements. This decision point is increasingly common as buyers weigh long-term costs and risk.
Despite high prices and limited inventory, most transactions on Long Beach Island close successfully. When deals fall through, it is usually due to buyer hesitation rather than issues with inspection or financing. Freeman observes that buyers entering this market are typically well qualified and have realistic expectations regarding pricing and the competitive landscape. Financing failures are rare, suggesting that most buyers have strong financial backing or are paying cash.
For investors, the best opportunities remain in premium locations, oceanfront, ocean block, bayfront, or large, oversized lots. Freeman advises focusing on these “blue chip” properties, which tend to appreciate fastest in strong markets and are more resilient during downturns. These assets are limited by geography and are often the last to decline if the broader market softens.
Investing in Long Beach Island real estate is not just about financial return, Freeman notes. Many buyers are reallocating funds from other investments into a tangible asset they can use and enjoy. This dual benefit, portfolio diversification and personal enjoyment, continues to draw affluent buyers despite rising entry costs.
Investors and developers must also consider upcoming regulatory changes. New Jersey is considering legislation to raise required building elevations by 4 feet in coastal areas. If enacted, these changes could significantly affect how new homes are built and may increase costs for both new construction and renovations.
While such regulations could make development more challenging, they may also enhance the value of existing homes that already comply with future standards. Properties that meet or exceed new requirements could become even more desirable as the supply of compliant homes remains limited.
Looking forward over the next one to two years, Freeman expects the Long Beach Island market to remain strong. Inventory is likely to stay low, and prices are expected to continue rising. “I think that the prices are going to continue to rise. I don’t think that they’re going to level out or stagnate,” he says. For buyers and investors, this means less time to deliberate and more pressure to act quickly when a suitable property becomes available.
Freeman’s advice to potential buyers is straightforward: identify a property that meets your needs and move decisively. Waiting for prices to drop or inventory to increase may mean missing out on appreciation and limited opportunities. The persistent demand from affluent buyers seeking coastal amenities, combined with a finite supply of buildable land, underpins this outlook.
Long Beach Island’s experience demonstrates how geographic constraints, steady demand, and lifestyle appeal can insulate a market from broader economic headwinds. While the cost of entry has risen sharply, the core drivers of demand, limited inventory, desirable location, and strong rental potential, remain in place.
As Freeman & Company expands with new offices in Harvey Cedars and Beach Haven, the firm is positioning to serve buyers and investors drawn by the island’s unique mix of scarcity and desirability. For those with the resources to participate, Long Beach Island offers a clear example of how premium coastal real estate can continue to outperform, even as other markets slow. The combination of limited supply, high demand, and evolving buyer expectations suggests the island’s premium pricing is likely to persist, reinforcing its reputation as a resilient and sought-after destination for both investment and lifestyle.
Explore similar articles from Our Team of Experts.
In a commercial real estate market characterized by shifting dynamics and selective opportunities, David Perlman, Managing Director and head of Thorofare Capital‘s New York office, bri...
The proliferation of short-term rentals in New Orleans has created a significant disruption in the city’s hospitality market, according to Len Wormser, Senior Vice President at HREC In...
After a historic run of rapid appreciation, the South Florida real estate market is beginning to cool. Larry Mastropieri, Broker and Owner of The Mastropieri Group, a boutique luxury brokera...
