AS VACATION HOME PRICES TOP OUT, NOW MAY BE A GOOD TIME TO CONSIDER A SKI CHALET OR SEASIDE VILLA
By Rochelle Mortensen
When the summer fun has faded and frost is in the air, many people start dreaming of winter vacation destinations. Whether the aim is finding a place with the perfect powder or a sunny beach spot to escape the winter doldrums, there are many great options to consider when buying a winter destination home.
LUXURY REAL ESTATE
- Las Vegas
- Salt Lake City
- Winter Haven, Fla.
- Provo, Utah
- Colorado Springs
If you’re looking for a luxury vacation home, it’s a good idea to consider the home as an investment tool. If you need or want to sell in the future, it will be easier to do so if you’ve bought in a place where demand can be expected to remain high. Start your search by considering what’s available in perennially popular vacation spots.
Indeed, some of the nation’s hottest markets right now are in popular vacation destination spots. Las Vegas, Salt Lake City and Phoenix among the nation’s top year-round markets. Other top 50 markets include Florida favorites Winter Haven and Miami, and wintery destinations like Provo, Colorado Springs and Denver. That’s no surprise. According to the National Association of Realtors, the South and West comprise a whopping 63 percent of existing home sales in the United States.
Evidence is beginning to show that housing sales have peaked for this market cycle, so buyers may find prices are a little more within reach in the coming months. According to economist Michelle Meyer at Bank of America Merrill Lynch, sales of existing homes have failed to top the level of 5.72 million reached a year ago in November.
“We are calling it,” Meyer says. “Existing home sales have peaked.”
To protect their investments, buyers looking for secondary homes should also look for homes with strong rental potential – that means keeping local restrictions for short-term rentals in mind if they plan to use the home as a vacation rental. Local codes are changing to keep up with the challenges presented by online vacation home rental services, so it’s best if buyers do some homework and find out what the local attitude is regarding such plans.
DOING YOUR HOMEWORK
Despite slowing sales volume, there remains a market for luxury homes in the economy. Sales of homes priced over $750,000 comprise 7 percent of existing home sales in the U.S. market, according to a recent report by Kiplinger. The strongest markets for luxury homes are in the South, where sales of homes priced over $1 million rose nearly 22 percent. In other markets, sales for luxury properties were considerably weaker.
Buyers looking for reassurance that they’re not overpaying might bear in mind that in six major metropolitan areas, 90 percent of homes have yet to recover all the value lost during the last crash. Las Vegas; Hartford, Conn.; Orlando, Fla.; Riverside, Calif.; Baltimore; and Miami have not yet seen prices as high as they were before the adjustments of a decade ago.
Sellers of luxury homes may well expect buyers to have smaller budgets in mind as mortgage rates, expected changes to tax laws, and increased renovation budgets will certainly play a role in the affordability of secondary homes. Rather than risking sitting on the market unsold, or guessing what a fair price might be in a fickle marketplace, sellers have the option of quickly maximizing their sales price through auction.
“Homeowners are finding it more challenging to sell high-end properties in many areas of the country,” says Nate Schar, director of Heritage Auctions’ Luxury Real Estate. “Our model encourages competitive bidding for each property, thereby ensuring properties sell for market value.”
Whether buying a ski chalet or a seaside villa, do your homework. Find out what destinations are popular and what you can expect from income and expenses from the property. Look for opportunities and be prepared to act on them when they arise. Most of all, buy a place that says “home” to you.
ROCHELLE MORTENSEN is manager of Heritage Auctions’ Luxury Real Estate (HA.com/LuxuryRealEstate). To learn more about luxury real estate auctions, contact Nate Schar at NateS@HA.com or call 214.409.1457.
This story appears in the Winter 2018 – 2019 edition of The Intelligent Collector magazine. Click here to subscribe to the print edition.