Activity in numerous popular vacation home markets across the country has steadily picked up steam, as buyers are attracted by value and a greater confidence in the economy. Closer to home, Colorado statewide sales have also inched up
Bloomberg Businessweek just ran an interesting article about who is buying, where and why. An abbreviated version is below and the full, original article can be found here.
From Hamptons to Tahoe, Summer Home Sales Edge Up
Prices for luxury second homes remain far below boom levels, but are beginning to climb in prime areas
By Venessa Wong
In April, Texas billionaire Kelcy Warren bought a 3,500-acre trophy property, the Boot Jack Ranch near Pagosa Springs, Colo. The retreat has about 77,000 sq. ft. of living space, seven lakes, and miles of pastures. The sale, worth $46.5 million, was the biggest U.S. residential transaction so far this year. What sweetened the deal was the discount: Warren, who made a fortune in the pipeline business, got the property for 53 percent of the original asking price—$88 million, which had already been reduced last year to $68 million.
The Boot Jack Ranch was an “exceptional purchase,” says the listing agent Bill Fandel, managing broker at Peaks Real Estate Sotheby’s International Realty. Sellers are generally more flexible now and buyers looking to acquire signature properties have an incredible opportunity now to negotiate in the second-home market, he says.
The price of properties in countryside, coastal, and ski resort locations, often used as second homes, fell by more than 12 percent in 2009, as reported in March by international property broker Knight Frank. Prices have stabilized but the market remains favorable for buyers, who have started spending again as the economy experienced a shaky recovery in the first quarter.
Sales in many vacation home markets are surging above the low levels seen in early 2009. According to regional first-quarter reports, unit sales in the upscale Hamptons resort community in Long Island, N.Y., increased 124 percent year-on-year, according to the Corcoran Group. In the Reno-Tahoe market, sales of homes priced over $1 million doubled in Tahoe City, Calif., and were up 33 percent in the lake’s East Shore in Nevada, reported real estate firm Chase International.
“If the value is there and the seller can accommodate the buyer’s interests, we’ll see continued increases in activity across the top-tier market,” says Fandel.
“My business is exploding”
The trend in the luxury market reflects the overall improvement in vacation home sales in the U.S., which rose last year by 7.9 percent, according to data from the National Association of Realtors. Across all price segments, 3 out of every 10 vacation home buyers in 2009 paid cash, reported NAR. In the $5 million-plus segment, a majority of purchases are made in cash because credit has contracted, Fandel says.
As buyers start to purchase higher-priced properties, the median transaction price has been increasing. In this year’s first quarter, Sotheby’s International Realty reported an average year-over-year price increase of 25 percent on open sales.
“My business is exploding,” says Joyce Rey, executive director of Coldwell Banker Previews International in Beverly Hills, Calif. Rey, who has some of the country’s most expensive residential listings, such as the $125 million Fleur de Lys and the $75 million Hummingbird Nest Ranch, recently put $37 million in escrow for three properties in one week—a record in her career.
Rey says interest has been coming from American and foreign business executives, entertainment moguls, and celebrities. Still, in this price range, there is a limited buyer pool and properties can take a number of years to sell, even in a strong economy.
Buyers are starting to come back and the confidence level is up, but they seem to be taking a more modest approach to lifestyle decisions, says Shari Chase, founder of Chase International, a leading agency in Lake Tahoe. Chase says trophy properties such as Tranquility—her $100 million listing—will still sell, but she expects wealthy buyers to own fewer luxury homes than they did during the boom.
“It’s still a buyers’ market”
How much did prices drop? Emerald Cay, a private island in the Bahamas, is now listed at $48.5 million, down from $75 million. The Albemarle House in Charlottesville, Va., owned by Patricia Kluge, former wife of media baron John Kluge, has been discounted to $48 million, from $100 million. Those are exceptionally dramatic examples. Most reductions were smaller.
“There are a lot of good deals to be had,” says Susan Breitenbach, senior vice-president and associate broker for the Corcoran Group. “It’s still a buyers’ market and that’s what driving it. That’s why people are buying now.”
