Demand for holiday homes in the US surges on buyer confidence
Buyer confidence underpinning rise in property values in US resort areas
Leslie and Scott Tyree backed out of a contract in 2011 to buy a weekend place in Hilton Head, South Carolina, fearing they would be anchored to a sinking market for second homes. This year, the West Virginia couple pounced on a listing in the same resort town without visiting the property.
They bought the two-bedroom condominium in an oceanfront golf resort for US$429,000 in April. Values this year in the Hilton Head area jumped 11.1 per cent from the first five months of last year and sales rose 9.3 per cent, according to the South Carolina Association of Realtors. Prices are still down by about a third from 2007, near the real estate market's peak.
"We knew several other people were looking at it and it wouldn't last long," said Leslie Tyree, 44, a lawyer who first saw the home two weeks before the closing. "We realised if we are going to do this at some point, we might as well do it now."
The surging buyer confidence underpinning the year-old rebound in US property prices - driven by mortgage rates near record lows - is spilling into seasonal communities from Lake Tahoe in California to the Berkshires in western Massachussetts.
Demand for holiday homes relies on discretionary spending and lags behind the broader market by about one or two years, indicating secondary properties were on the cusp of a recovery, said Jeff Meyers, a housing research consultant with Beverly Hills-based based real estate firm Kennedy-Wilson Holdings.
"We're starting to see a lot of resort markets really strengthen," Meyers said. "Prices going up in the core markets has had a big influence on what people do with their vacation homes and their ability to purchase them."
US home prices rose 12.1 per cent in April, the biggest jump since February 2006 and the 14th consecutive year-on-year increase, said CoreLogic. That is helping more Americans feel optimistic about their futures, with the Conference Board's consumer-confidence index climbing to a five- year high last month.
Asking prices in holiday areas have advanced more slowly. On a per-square-foot basis, May median prices in primary markets jumped 7 per cent from a year earlier, compared with a 1 per cent increase in areas where at least a quarter of properties were seasonally occupied, said Trulia.
List prices were up 1.6 per cent in the Hamptons on New York's Long Island, 1.4 per cent in Dewey Beach in Delaware, and 8.9 per cent in the Big Bear Lake and Lake Arrowhead areas near Los Angeles, the data company said.
"A vacation home is not most people's first purchase as we emerge from a recession," said Jed Kolko, chief economist of San Francisco-based Trulia. "But if the recovery continues we could see price increases accelerate."
Second-home sales climbed 11 per cent last year to 553,000, according to a survey by the National Association of Realtors. That compares with the peak of 1.07 million in 2006.
In some holiday areas, prices have begun to follow or even exceed surges in primary markets. In the Los Angeles area, home prices were up 30 per cent in the 12 months to May; the California desert getaways where Liberace, Frank Sinatra and Bob Hope owned weekend estates were following, with a jump in values and a revival of construction, said Michael Hilgenberg, an owner of broker Keller Williams International franchises in resort towns including Palm Springs, Rancho Mirage, and Big Bear Lake.
Prices rose 24 per cent in Palm Springs and 25 per cent in Rancho Mirage in the 12 months to May, said DataQuick, a San Diego-based research firm.
Attractive prices and historically low mortgage rates spurred Alon Antebi, an orthopaedic surgeon who lives in the Los Angeles suburb of Santa Clarita, to buy two holiday homes this year. In April, he paid US$775,000 for a 3,400 square foot mountain log cabin in Big Bear. In May, he bought a 4,800 sq ft dockside retreat in the coastal city of Oxnard for US$2 million.
Antebi, 42, negotiated a 10-year mortgage at 3 per cent from Wells Fargo, a bank, for the Big Bear house, on which he made a 50 per cent down payment. He got a 3.25 per cent rate on a 30-year loan from Bank of America for the Oxnard house.