A national and local look at how the vacation- and second-home market is faring. By Gayle Bennett – Reprinted from The Real Estate Specialist
While 2014 was a strong year for sales, the overall median price of vacation homes slipped 11 percent to $150,000 from $168,700 in 2013. NAR attributes that decline to increases in condo and townhouse sales, an increase in distressed property sales and an uptick in sales in the South, where prices are often lower.
Bruce and Sandy Soli, both CRSs with Sierra Sotheby’s International Realty, work in the Lake Tahoe area of Nevada and California. Their market is a mix of single-family homes, planned-unit developments and condos. Prices range from around $400,000 to $35 million, with the most active piece of the market between the $600,000 and $1.2 million price points.
Prices in Lake Tahoe fell from 2008 to 2010 due to the distressed properties that filtered their way into the market, but many sellers opted to remove their homes from the market rather than discount them further. “They didn’t feel the need to sell because when they buy homes in Tahoe, they are buying more of a lifestyle than an investment,” says Bruce Soli.
Year-over-year sales were down in 2014 — 345 total sales compared to 443 in 2013. The Solis attribute this mainly to tighter inventory. The median price in Tahoe tends to vary wildly from year to year, given the range of real estate. “The median will be skewed heavily when we have a lot of luxury sales,” Sandy Soli says. Last year, demand was strong and supply was low, which has remained the story this year so far.
In the Fort Myers area of Florida, distressed properties were a huge portion of the overall market coming out of the downturn. But like Lake Tahoe, there weren’t that many homebuyers in the second-home market, according to Michael Polly, CRS, vice president of real estate operations with Royal Shell Real Estate. “The second-home market was affected, but nothing like the primary home and investor market,” he says. “There were a lot of other factors that kept buyers sitting on the fence.” He cites the hit people took in their other real estate holdings and the 2010 Gulf oil spill, which even though it didn’t affect the Ft. Myers area, nonetheless depressed sales activity.
Last year, sales and median price were up in almost all the vacation-home areas from Marco Island to Captiva Island. “We’ve seen about a 20 percent increase in sales of homes that sell above $500,000,” says Polly, indicating the lower price point of most vacation homes in his area that are close to the beaches. “We’ve seen that for 2014 over 2013 and in the first quarter of 2015 over 2014.”
Kay Pearson, CRS, associate broker with the Pearson Group, also works in Florida, but only in the winter. Starting in April and through the summer, she works in the Lincoln and Hubbard Lake areas of Northeastern Michigan. Her primary focus there is the Lost Lake Woods Club, a private, gated club that started in the 1920s as a hunting and golf community.
As was the case in most of Michigan, the downturn hit this area hard. “These second homes became unfeasible because of the automotive downturn,” Pearson says. “People had trouble with their primary homes, so the second-home market just wasn’t happening.” But since the downturn, the average sale price has been climbing — from $81,831 in 2009 to $115,721 in 2014 — and the number of sales last year was 21, compared to eight in 2009.