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Rolling the dice on Atlantic City

To quote Springsteen, "maybe everything that dies someday comes back."

In 1981, Louis Malle’s Atlantic City, starring Burt Lancaster and Susan Sarandon, joined the few dozen films nominated for all “Big Five” Academy Awards, including best picture, direction and lead actors.

It didn’t win any of them.

Such has been the roller coaster of fortunes for Atlantic City and the greater metro area that surrounds it. The Atlantic City-Hammonton, New Jersey Metropolitan Statistical Area (MSA), boasting its legendary boardwalk and coastline, is now as well known for its bankrupt casinos. And, rather than a growing population with an expanding economy, the region remains on a downward trend.

This was driven home once more in our March 1, 2018 VeroFORECAST, which projects real estate appreciation in 342 MSAs over the next 12 months. The seaside MSA now sits at the deepest spot in the cellar, with a projected -2.9% depreciation.

As I detailed in the second column in this HousingWire series, only nine of the 342 MSAs included in the VeroFORECAST that covers through March 1, 2019 are predicted to depreciate. Eighteen of the 25 markets forecast to perform the worst are east of the Mississippi River and 92% of the 25 markets predicted to appreciate the most are west of the Mississippi.

Low demand for housing, with a current supply around nine months and rising, has kept our predictions for Atlantic City-Hammonton in negative territory for years. The population has been declining for decades and its 6.4% unemployment is nearly two-and-a-half percentage points above the national average.

The Atlantic City-Hammonton metro area’s -2.9% depreciation is the highest amount forecast, leading eight more in negative territory:  Joplin, Missouri (-1.4%), Goldsboro, North Carolina (-1.1%), Longview, Texas (-0.8%), Peoria, Illinois, (-0.6%), Trenton-Ewing, New Jersey (-0.6%), Springfield, Illinois (-0.5%), Vineland-Millville-Bridgeton, New Jersey (-0.5%), and St. Joseph, Missouri/Kansas (-0.1%).

This reflects a serious drop over last quarter’s update where Atlantic City was forecast to depreciate 0.7%, and more evidence that the region’s fortunes rise and fall like those relying on a spin of the roulette wheel. In the VeroFORECAST that covered the 12 months between December 2017 and December 2018, no MSA had projected depreciation greater than -2.0%. Atlantic City-Hammonton, though still projected to depreciate, had a rate of only -0.7%, less than a quarter of what we foresee through March 2019. A year earlier, in our fourth quarter 2016 forecast, this MSA had a depreciation projection of -1.8%, roughly the same as it was two years earlier in late 2014, when we forecast depreciation of -2.0% through the end of 2015.

These trends are corroborated on DataUSA’s website, which adds declines in income and people employed to the dropping population numbers. The population is also a few years older than the national average, another indicator of an economy fighting to turnaround decline.

In September 2015, The New Yorker provided a sympathetic portrait of its southern neighbor in “The Death and Life of Atlantic City,” noting that, “Property taxes in the city have doubled since 2008 and were up 29% in 2014, to make up for the drop in tax revenue from the casinos and in the taxable value of the property.”

And yet, the MSA’s business owners and residents, as well as the rest of Americans, hope to see the region rebound. As Bruce Springsteen sang in his tribute, “Atlantic City”: “maybe everything that dies someday comes back.”

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