Vacation homes in popular areas saw their valuations rocket with the broader residential market during the real estate boom. Now that the market has cooled and the investment speculators have gone home, buyers can expect to find a wide selection and prices that are flat or slightly lower -- at least in some regions.
While those factors have tilted the balance in favor of prospective buyers, notably in areas with a glut of new condos, prices in many of hottest markets haven’t seen remarkable declines from their highs. Consequently, beachside bargains may be scant – and those seeking deals may have to travel to slightly less fashionable destinations to find true values. But for would-be buyers yearning to relax at their own retreat, rather than to turn a quick profit, conditions have improved. Interest rates also remain favorable.
“During the height of the boom, there was no inventory and what was available was overpriced, so you were apt to compromise on the home itself and the price you paid,” said David Hehman, president of EscapeHomes.com, an online vacation-home marketplace. Now, "it's a great time to buy (because) there's more inventory than ever."
Though vacation home sales declined precipitously in some regions, pricing didn’t necessarily follow suit. For instance, in California, where second-home purchases plummeted 37% last year, the median price paid still rose nearly 11% to $400,000, according to DataQuick, a San Diego firm that tracks national home sales.
Buyers have less bargaining power on the vacation home market because homeowners can typically afford to let their properties sit for longer periods. Instead of slashing the price, they can simply enjoy it for another season or rent it out, brokers say.
Pricing trends vary tremendously across geographies and terrain: beach houses tend to be pricer than mountain homes, but a ski chalet in the Pocono Mountains is far more affordable than a mountainside retreat in Aspen.
We took a look at market conditions in several vacation spots.