Spend winter in Colorado, summer at the beach house and autumn at a mountain retreat. Stay home for a magnolia spectacle spring in Mississippi. What could be more fun than following the seasons to experience the best time at each of your homes? It’s hardly a new idea for the rich, but now this lifestyle is going mainstream, and is within reach for executives throughout the state, who are snapping up second, third and even fourth homes.
“This is not just a millionaire’s dream anymore,” says Paul Bessler, vice president for strategic marketing at Dallas-based Centex Destination Properties.
According to a National Association of Realtors survey in 2006, sales for non-primary residence homes accounted for four in 10 residential transactions in 2005. Many multiple-home owners acquired their third and fourth homes from increased value profits from their first and second homes, inherited homes or those acquired through remarriage.
The typical vacation-home buyer: 59, earns slightly more than $120,000 annually, acquired a property 220 miles from his primary residence and spends 39 nights per year at the property. More than likely, it’s located near an ocean, river, lake, mountains and/or golf courses. It measures roughly 1,500 square feet and is valued around $200,000. Chances are good he bought it for personal use, perhaps wanted to diversify his income, maybe is considering retiring there, and doesn’t rent the property.
Two years ago, second-home sales were at an all-time high, with vacation homes and investment properties reflecting robust double-digit growth in 2005. Cheap air fares were fueling another trend: buying second or subsequent homes more than 500 miles away from their primary residence. “Every year, we watch as distance becomes less of a factor,” says David Hehman, CEO of EscapeHomes.com, whose Web site named these cities among the most popular property searches in June 2005:
1. Orlando, Fla.
2. Destin, Fla.
3. Naples, Fla.
4. Myrtle Beach, S.C.
5. Ocean City, Md.
6. Phoenix, Az.
7. Venice, Fla.
8. Galveston, Texas
9. Bend, Ore.
10. Las Vegas, Nev.
A couple of years later…
What a difference two years makes. With the national housing market in crisis mode, foreclosures rising sharply on subprime mortgage loans and fuel prices skyrocketing, HousingPredictor.com forecasts “Vegas,” Phoenix and Naples, Fla., among the 10 worst housing markets in the U.S. of the 250 local housing markets the Web site service monitors. EscapeHomes.com’s last posting? “Second Home Sales Fall …” in April 2007.
HousingPredictor’s bottom 25 list is strongly dominated by California cities — Riverside, Anaheim, Los Angeles, San Diego, Fresno, Sacramento, San Jose and Bakersfield — which have the fastest deflating real estate markets in the nation. For the second consecutive year, Miami leads the list based on the highest forecast deflation, while Sin City reflects the highest rate of subprime mortgages in the country. Two other Florida markets — Fort Lauderdale and Palm Beach — also made the list.
“It’s going to be interesting to see how long it takes the housing market to come back to good health,” says Mike Colpitts, president of HousingPredictor.com, also a Realtor in Destin, Fla., where prices on some property have fallen as much as 50% over the last three years. <p
Smaller markets emerging?
So what markets dominate the Top 25 Appreciating U.S. Markets? “Hawaii is the strongest single state in the nation for real estate sales,” says Colpitts, pointing out that Honolulu, Maui and Kauai rank second, fourth and ninth, respectively. “Interestingly, the top markets for 2008 are scattered throughout all parts of the U.S. More people are (choosing) smaller, less urban cities.”
Of interest to Mississippians: Biloxi (8), Austin, Texas (10), Grand Junction, Colo. (11), Mobile, Ala. (13), San Antonio, Texas (20), Pascagoula (22) and Hattiesburg (23).
“With recent events (Fed rate cuts), we’ve begun to see some good activity again,” says Colpitts. “But we’re at historical lows … I hope. The high-end market has come down so much that if this isn’t the bottom of the market and the time to buy, I don’t know when it’s going to be.”
NEXT IN THE SERIES: The Mississippi Business Journal will look at some of the most popular vacation home markets for Mississippi executives. If you have a story to tell about your vacation home, please contact MBJ contributing writer Lynne Jeter at firstname.lastname@example.org.
Contact MBJ contributing writer Lynne W. Jeter at Lynne.Jeter@gmail.com.