Home Repo Homes For Sales Second Homes For Sale

Second Homes For Sale

Written by Esperanza D. Coffey    Wednesday, 29 April 2009

Low interest rates strengthen the appeal of vacation properties Roommates Jennifer Bossin, 32, and Kelly Donnelly, 33, had rented ski houses for the past five seasons. In August they decided it was time to buy. After only three days of looking, they settled on a 1,900-square-foot house in Lake Tahoe, Calif., and paid $238,000. "It just didn't make sense not to do it," said Donnelly, citing their uncharacteristically low rent in the San Francisco Bay area and a "shockingly low" mortgage--7 percent--in Tahoe. The second-home allure is catching. Homes that are used only seasonally now number 3.2 million, according to the Census Bureau, up from 3 million five years ago. The economy is largely responsible; interest rates are low, and getting a mortgage for a second home that won't be rented out or otherwise used as an investment is now as easy to get as one for a primary home, says Neill Fendly, vice president of the National Association of Mortgage Brokers. Changes in the capital-gains tax are also contributing to the boom. Before last year, sellers could avoid the tax only if they bought a house that cost at least as much as their old one sold for. Now married couples who have lived in their home for at least two of the previous five years can permanently escape tax on profit of up to $500,000 on a primary home, singles up to $250,000. Some couples are buying smaller homes and reinvesting their assets in vacation property. As a result, Realtors in resort communities throughout the country are seeing some of their best seasons in years. Jim Jacobs, a Tucson, Ariz., Realtor, says his area is experiencing record second-home sales, with buyers from the same cities buying second homes near each other. In Orlando, Fla., Realtor Barbara Rylands is seeing both primary and vacation homes selling at 97 percent of the asking price during their first listing. In Whitefish, Mont., a year-round resort community, Paul Wachholz, a local broker, expects strong home sales to continue over the next few months, which are traditionally slow. All three areas have seen rising prices. The second-quarter median price for an existing home in Tucson was $114,100, up 8 percent from $105,600 a year ago, according to the Realtors' association; Orlando was up 4 percent, to $97,000 from $93,600. Whitefish saw a 13 percent increase, to $135,000 from $120,000, says the Northwest Montana Association of Realtors. Room with a view. Because homeowners can never predict what home prices will look like when they need to sell, experts warn against buying second homes solely as investments. And since a second home will most likely be one of the most expensive purchases homeowners will ever make, it is important to let common sense, rather than emotions, guide buying decisions, says resort-home expert Christopher Cain. Unlike Bossin and Donnelly, who plan to re-evaluate the merits of their joint ownership in five years when they may each have families, Billy Bischoff and his wife, Diane, plan to retire in their second home. The Bischoffs live in northern Bergen County, N.J., but spend a quarter of the year in Naples, Fla., where they bought a home near the Gulf of Mexico in March 1997. Amenities geared toward the elderly like trams to the beaches and an abundance of doctors make life easier for parents of four children, says Bischoff, 38. Other baby boomers should consider buying now, he says. "We're going to have a burst of retirees, and property will get even dearer," he predicts--particularly in areas like Florida, which will rank second behind California in having the largest number of elderly by 2011, according to the Census Bureau. Head for the mountains Home price increases for selected localities identified by real-estate agents as having large numbers of vacation homes Prices for existing single homes Area '98 '97 pct. Change Breckenridge, Colo. $381,852 $306,093 24.8 Daytona Beach, Fla. $79,200* $76,800 3.1 Del Mar, Calif. $437,182 $400,000 9.3 New Hanover County, N.C. $122,000 $119,000 2.5 Palm Springs, Calif. $100,500 $98,000 2.6 White Mountains area, N.H. $93,500 $80,000 16.9 *Preliminary data. All prices are median sales prices except in Breckenridge, where prices are averages. All prices are for second quarter of each given year.

Last Updated ( Wednesday, 29 April 2009 )