Finite Land, Sentimental Buyers, and Zoning Pushback: What's Driving the Jersey Shore Housing Market

Written by:

Alejandra Rodriguez

Date:

19 Jun 2026

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Along New Jersey’s coastline, a string of barrier islands stretches from Brigantine down to Cape May, forming one of the most geographically constrained and emotionally driven real estate markets in the Northeast. With finite land, seasonal population swings, and a buyer base shaped as much by childhood memories as by investment logic, this market operates by its own rules – and those rules are changing in 2026.

Michael Sutley, Founder and CEO of Lexy Realty Group at Keller Williams Realty Jersey Shore, has worked this market long enough to recognize when conditions are shifting. His path to real estate began during his years as a homicide detective, when he spotted a vacant property while canvassing a neighborhood during an investigation. He bought it, renovated it, and never looked back. A family background in construction estimating now shapes how his team evaluates development opportunities across the shore towns.

Geography-Defined Market

The physical reality of barrier islands creates conditions difficult to replicate elsewhere. The land is finite, surrounded by wetlands, and cannot expand. That scarcity underpins nearly every dynamic in the market – from pricing pressure to the growing appetite for teardowns and new construction.

The towns Lexy Realty Group serves each carry their own identity and price thresholds. Entry-level single-family homes in Avalon and Stone Harbor start at $1.1 to $1.2 million, while Ocean City’s entry point is near $900,000, and Brigantine’s is closer to $600,000. Demand at those levels remains strong. At the upper end – properties priced at $25 million or more – the pace has slowed noticeably, with buyers taking considerably longer to commit.

Who’s Buying Now

The buyer profile has evolved since the pandemic reshaped migration patterns. Remote workers who relocated to the shore full-time during COVID have largely transitioned back to treating their properties as second homes or investment assets as return-to-office mandates took hold. Today, the dominant buyer is what Sutley describes as the boomer generation – individuals who have accumulated wealth through equity markets and are now deploying it into lifestyle real estate.

What makes this market particularly distinct is the sentimental dimension of purchasing decisions. Families who vacationed in Ocean City as children tend to return to Ocean City as buyers. That loyalty is consistent, and it shapes demand in ways that raw market data often misses. “Buyers have unique sentimental value towards certain towns,” Sutley notes.

Geographically, most buyers are from the greater Philadelphia region and South Jersey, with Brigantine drawing more influence from New York and North Jersey due to its relative accessibility and lower prices.

Normalized, Not Stalled

After years of compressed timelines and competitive bidding, the market has settled into a more measured pace. Buyers are more selective, taking time to see more homes and make deliberate decisions rather than competing under pressure. “They’re able to do a little bit more homework, decide what they want, see more homes, make better decisions for themselves,” Sutley says.

Sellers, however, have been slower to adjust. Many remain anchored to expectations set during the COVID-era run-up, when multiple offers and above-ask closings were routine. Properties priced correctly from the start perform well, but overpriced listings often sit until sellers accept what the market is telling them.

Life events and seasonal fatigue are the primary motivators pushing sellers to list. Some owners, worn down by a particularly cold winter, are pursuing 1031 exchanges into warmer markets like the Carolinas or Florida. Without that kind of motivation, many second-home owners simply have little urgency to sell.

Bayfront vs. Beachfront

One nuance that outside observers frequently overlook is the preference for bayfront and lagoon-facing properties over direct beachfront. The reasoning is practical: a bayfront home typically allows for a boat, a jet ski, a pool, and beach access. A beachfront property offers an ocean view but limits water-based recreation. “Most buyers prefer that waterfront of like a bay or lagoon,” Sutley explains. When bayfront properties are priced correctly, they move quickly.

This preference also tends to be reflected in resale dynamics, where bayfront homes attract a broader pool of active-lifestyle buyers rather than those drawn purely by scenery. For investors weighing the two, the bayfront category’s wider appeal can translate into stronger negotiating leverage and more consistent year-round interest.

Zoning Pushback Intensifies

The tension between builders seeking to maximize lot potential and communities trying to preserve their character is becoming a defining issue across the shore towns. Older homes – particularly those built in the 1980s or earlier – are drawing strong interest from developers looking to construct single-family or duplex properties. The demand is significant enough that some municipalities are pushing back through zoning changes.

Sutley points to Brigantine as an example of a community resisting the kind of dense buildout seen in places like Sea Isle City, where lots have been developed to their maximum envelope. “Certain towns are pushing back with zoning, saying that we want smaller footprints and more of a town feel,” he notes.

For developers evaluating opportunities, Sutley is direct about what matters most: “Everything comes down to the buy-in price – what you’re paying for the actual dirt itself. That is going to make or break you. Everything else is pretty much a fixed cost.”

What Investors Overlook

One constraint that outside investors frequently underestimate is the regulatory complexity tied to flood zone designations. Under FEMA’s 50% rule, if renovation costs on a flood-zone property exceed 50% of the structure’s assessed value, the entire home must be elevated – a significant and sometimes deal-breaking expense. Sutley’s construction estimating background allows his team to flag this risk early in the evaluation process. Pine beetle damage to pilings is another recurring issue on older coastal homes, adding complexity that buyers unfamiliar with the market may not anticipate.

For buyers focused on New Jersey’s reputation for high property taxes, the shore towns offer a counterintuitive reality. Despite high purchase prices, property taxes in most of these coastal municipalities are relatively low by New Jersey standards. “People look at the high price points and don’t realize that for a state like New Jersey, you’re coming in and paying very low taxes, which offsets some of the payment you’re thinking of,” Sutley points out. It’s a detail that changes the investment calculus for buyers who stop at the sticker price without examining the full cost of ownership.

For those entering the market as rental investors, proximity to the water or to walkable downtown areas has moved from a preference to a near-requirement for viable returns. Rental demand across the shore has been declining gradually, but well-located properties continue to hold steady. “If they have to walk farther, you’re not going to be able to command the rental price that gets you to break even,” Sutley says.

What’s Ahead

Looking forward, the firm is moving deliberately into development. Lexy Realty Group is currently launching development operations in Ocean City, with plans to expand into Margate, Longport, and Ventnor in subsequent phases – a move that reflects both the team’s existing expertise and the direction the market is pointing.

For investors and professionals looking to understand the Jersey Shore market, the broad strokes matter less than the specifics – the zoning shifts, the FEMA thresholds, the sentimental buyer patterns, the bayfront preference. As Sutley puts it: “It doesn’t matter what’s happening inland. We’re our own unique market.”

About the Expert: Michael Sutley is the Founder and CEO of Lexy Realty Group at Keller Williams Realty Jersey Shore, serving the barrier island communities of the New Jersey coastline from Brigantine to Cape May. His background includes a career as a homicide detective and family experience in construction estimating.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.