New Lending Rules Add Challenges For Prospective Buyers
OCEAN CITY - Ocean City's Economic Development Committee (EDC) met this week to discuss a wide variety of important local issues, from the status of the real estate market and major cuts in the state tourism budget to golf package bookings to summer events. The following is a quick look at some of the highlights from Wednesday's meeting:
Real Estate: Coastal Association of Realtors President Gregg Holland of Coldwell Banker Residential Brokerage told EDC members the area's real estate market continues to show signs of slow recovery although there certainly aren't any reasons for celebration yet. For example, the total number of active listings for condominiums in the resort area declined in 2009 compared to the same time last year, while the number of contracts went up slightly and the number of settlements declined.
CAR member Kathy Panco told EDC members the new Fannie Mae and Freddie Mac lending standards were making an already stagnant market more difficult. Panco said even with an above-average credit score, the federal lending agencies, which underwrite most housing loans, are now requiring as much as 25 percent down along with 5 percent closing cost and points.
'For a typical $300,000 property, that represents about $95,000 needed in cash for most buyers,' she said. 'That 25-percent down eliminates a lot of people right off the bat. There's a huge difference between 25 percent and 10 percent for most people.'
Panco also explained new Fannie Mae and Freddie Mac regulations on loans in condominium buildings such as the many that line the strip in Ocean City. For example, the federal lending agencies won't write new loans for condos if there is a rental office on the premises, or if the building contains 20-percent commercial space, or if there are time shares in the building or even the possibility of time shares in the future, or if there is any pending litigation related to any other unit in the building.
State Tourism Budget: Ocean City Assistant Tourism Director Debbie Travers told EDC members the state is slashing its tourism marketing budget this year after several years of modest gains in spending on promoting Maryland including Ocean City. Travers said the state tourism marketing budget had nudged up to around $7 million in recent years, but the figure has been cut to around $4.9 million in the budget currently on the table in the General Assembly.
'It's down to around $4.9 million for the entire state after we fought so hard to get it up to around $7 million,' she said. 'That's just a whisper compared to what other states are spending on tourism promotion. It's really pretty pathetic. It's going backward.'
Travers said the resort, which has seen its own tourism marketing budget increase thanks in large part to the dedication of a percentage of the room tax, will have to go it alone this year.
'The state won't have any presence in the travel market this year,' she said. 'Maryland has no television advertising. It's almost like circling the wagons. We're going to get no help from the state and we're going to have to pull together like we always do. It's important now more than ever.'
Golf Bookings: Ocean City Golf Getaway Chief Operating Officer Mike Cleary gave a mixed message about the status of golf package bookings. Cleary said the first quarter just ended with the number of rounds played in the resort area down slightly, which is to be expected considering the weather during January, February and March. For the remainder of the spring season, the number of advanced bookings is also down slightly, but not nearly as much as some of Ocean City's competitors in the market.
'I've talked to my peers in neighboring states and they all expect to be down about 5-10 percent this spring, which is pretty much the standard up and down the east coast,' he said. 'Myrtle Beach is down about 17 percent for the spring, which is a pretty big number.'
Cleary said his agency is partnering with other facets of the business community to ensure golf continues to thrive in the resort area.
'The courses, the hotels and the restaurants are doing everything they can to entice groups that always come to continue to come to Ocean City and to reach out and attract new groups,' he said. 'I make it a point to get out and see the large groups that come year after year and I feel like the ones I've talked to are coming back.'
Chamber Grand Ball: Greater Ocean City Chamber of Commerce Executive Director Melanie Pursel told the EDC this is usually the time of year when the Citizen of the Year award is announced, but the chamber is embarking on a new idea this year. Instead of having a separate officer installation dinner, Citizen of the Year banquet and Spirit of Ocean City Award banquet at different times of the year, the chamber in 2009 will have a single First Annual Grand Ball in September during which all of the ceremonies will take place. The larger, single event is scheduled for Sept. 11, and given the significance of the date, the grand ball will have a patriotic theme