By Julie Bennett (The Wall Street Journal RealEstateJournal.com)

Ocean City, Md., a five-mile strip of land in the Atlantic Ocean, has only 7,200 permanent residents. But in the summer, that population swells by 350,000 people who travel three or four hours from Philadelphia, Washington and other eastern cities to vacation there.

"People whose kids are out of college and now have disposable income all seem to want a beach home," says Mr. Galloway. "And all properties in Ocean City are within three or four blocks of the Atlantic." Developers are scrambling to meet their demands, and at least 15 condominium projects are in various phases of construction. In early February, the Galloways had 828 condos listed for sale -- 600 of which hadn't been built yet.

"It's outrageous," says Jim Salmon, of Annapolis, Md., who quit his job teaching college to speculate in beachfront realty. Mr. Salmon pays $5,000 for preconstruction reservations for condos in the planning stages, then flips the units once they're finished. He bought one unit for $620,000 recently and sold it a few days later for almost $800,000, he says. He does keep a few top-end condos that will be decorated with upscale furnishings and will be rented for as much as $6,000 a week during the summer...More