Everyone’s saying it, and the low interest rates prove it: It’s a buyers market and a great time to buy a second or vacation home—if you can afford it. Just like every other sector of the housing business, though, the vacation-home market has fallen victim to the financial meltdown.
/webhouse.jpg) Priced under assessed value, this home on Wintergreen’s Devils Knob Golf Course is in move-in condition and is listed at $597,000. Photo courtesy of Francesca San Giorgio.
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“Things are moving at Wintergreen, but the prices are so low,” said Francesca San Giorgio of Four Seasons Realty, which specializes in Nelson County and Wintergreen properties. “You can get a house or condo with a view, whereas before you couldn’t even afford to look at a condo with a view.”
The latest data from the National Association of Realtors (NAR) reflects this trend. According to its 2011 Investment and Vacation Home Buyers Survey, the median vacation-home price declined more than 11 percent in 2010 to $150,000 from $169,000 in 2009. The prices of investment homes suffered much the same fate, with a decline of 10 percent compared with 2009 numbers.
One of San Giorgio’s clients has a condo ready to be put on the market. The property is currently assessed for more than $300,000, but it will be put on the market for much less than $250,000.
“People are being very realistic,” said San Giorgio. “They are usually pricing their homes or condos under [assessment] and they are barely making a profit, if at all.”
The number of vacation homes has declined nationwide to 543,000 in 2010 from 553,000 in 2009, according to the NAR survey. For Julie Kuhl of Re/Max Affinity Group, the number of phone calls for mountain land has declined in the last year.
“I used to show mountain land at least two weekends a month, and now I don’t think I show mountain land more then once every four months,” she said.
Those who can afford to buy land to build a home, however, choose mountain views and are very specific about the style of home they want to build.
“Most of them are looking for something unique, with character, something that’s rustic,” said Kuhl. “Generally 1,400 square feet is sufficient, because they just want a little getaway.” More specifically, Kuhl says clients, who are usually from Richmond, Washington, D.C. and Northern Virginia, buy within the $175,000 to $275,000 range. “That could easily get you a brand new log home on five acres in the mountains.”
But when it comes to paying for that small getaway, although mortgage interest rates are at an all-time low, getting a mortgage can be a challenge. Those who can, pay cash.
In fact, according to the NAR survey, 36 percent of vacation-home and 59 percent of investment-home buyers paid for their properties in cash. If you can’t afford to pay in cash, you may still be able to get a good deal on a loan.
“The financing is still very favorable,” said Kuhl. “The guidelines have not changed; you qualify with the same rates as you would for a first-time home.” The only difference is that vacation-home buyers will have to come up with 20 percent as a down payment and cannot apply for FHA loans.
For sellers of vacation homes, the scenario is tougher. San Giorgio: “The first thing that a seller has to do is be realistic and price well. Price is pretty much what is going to bring people in the door.” When that fails, Kuhl suggests renting. “I think it’s probably the smarter thing to do than to give your property away right now,” she said. “The rental market is strong.”