The Second Home Muse

Third Homes Are In

A study done for Florida developer WCI Communities  reports that of 1,743 homeowners, 20 percent own a primary residence and second home, and 9 percent own a primary residence and at least two second homes. The term 'supersplitters' is being used to describe those who really move from one place to another seriously, as opposed to just short term vacation.  That's a pretty high number, but it seems that the statistics justify it based on the disposable income of a large percentage of families.

The supersplitters often are into the third house for investment purposes, but they are also able to telecommute to work and therefore live on the slopes, on the beach or in the city, depending on their inclination at the moment. It also appears that to make this feasible, the homes need to be in driving distance of each other.

Where is this headed? My sense is a lot depends on the mortgage rates. If they rise, there would be less incentive to carry the costs of a third house. Then again, maybe it's just fun!

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Numbers again!

Seems like just when we finish reporting on the numbers, new housing numbers appear as the headline news. So, just you can say you are on top of things, here is the January report: New Home sales are down by 5%.  The biggest drop came in the Northeastern states.

So what, you may say, I'm not buying a new home for my second home anyway. Probably true. But it can be helpful to keep in mind that when there are too many new homes being built, and the supply is greater than the demand, the overall affect is that you, the buyer, will have more leveraging power. The increase in the supply of new homes comes partly because of the recently high  prices: the developers look at the numbers at the top of the market, and want to get their share. However, investors are getting wise up, and ready to sell out, also adding to the supply on the market.

So if you are ready to purchase a second home, you may get a better deal in areas where there is a greater supply than demand, even if you are buying an already existing home. Bottom line: check the figures in your area before you decide that you have gotten the best buy for your money. Shop smart, and be happy.

Housing Statistics: Understanding the numbers

Recently, I received the November housing numbers for Arizona. Musing on the figures, (number of sales down, prices up) I wondered how this information is beneficial to you, the second home buyer. My hunch is this. First, if you are seriously interested in an area, it pays to work with a realtor who can give you the statistics on a regular basis. Then I would watch for the relationship between number of sales and prices.

If the sales are slowing and the prices are still rising, my sense is that it indicates an overpriced market. I would wait before buying in. Another possibility there is a limited market. That is, not enough houses to meet the demand. It's a good chance bidding wars go on there. Personally, I'd stay away.

On the other hand, if the sales are slowing and the prices are dropping, it may be that owners are trying to hold out for a better price, but they are not winning the battle. It's a good time to go in and make a low bid. Finally, if the sales are rising, and the prices are going down, a bargain sale may be happening.. Get information and find out why. That's my hunch... what's your experience?

Town Checklist

On a visit to my friend's house the other night, I was surprised by a little scribbled list on her table. Turns out to be her on-going check-list of the features she feels are important in the towns that she is looking into for real estate. I realized how closely the list resembled her interests, and wondered if every one did this same exercise. Her list includes some obvious and some not-so-obvious items: Public Radio, Whole Foods, Farmers Market, Permaculture, Health Insurance, a branch of her church. Here are the ones I wouldn't have thought of: high-speed Internet access, good building codes, lenient laws on wood stoves and access to ethnic and gourmet food.

I realized that the list comes from a combination of things she does have already and doesn't want to lose in her second home; and also things that are not possible where she lives, and she would like to acquire in her new home. Seems to me that with a list like this, it would be much easier to narrow the field when looking for spots for your second home. I'd love to hear what your lists look like.

Economics of Second Homes Studied in Colorado

Durango, Colorado may be on to something-- rather than act on complaints about the negative impact of growing numbers of second homes, the council decided to find the facts first. What a novel idea! And guess what it found?  Second homes are actually pretty good, all things considered. For one thing, the study reports that second-home construction bolsters the local economy with  jobs, wages and proprietor income.

Another discovery was that it isn't the second home owners building McMansions. In fact, the second homes tend to be smaller condos. And finally, the county is not being over-run. The study found that 29 percent of county land is owned by  non-permanent residents, compared to neighboring counties where
non-residents have between 59 to 83 percent of private  county land.

Seems to me that this town could set a precedent for other towns that are battling the 'what about us?' syndrome that occurs among local residents. Getting facts may not make everyone a lot happier, but at least better informed.

For the entire article, see The Durango Herald.

The Latest from the SouthWest

Wondering how prices are doing outside the hot-spots? A friend just checked out New Mexico, and made this interesting assessment. The hot spot, Santa Fe, great for folks who want to get away from the cold in places like Colorado, is not only pricey, but also a bit touristy. A great alternative seems to be little Taos. At a high altitude, it has less of the tough summer heat that Albquergue and Santa Fe have. It does get a bit chilly in the winter, but it's quiet, rural, and best of all, way less expensive than its costly neigbhors. You can get a good home for about $220k. If you live in Denver or Boulder and want both a good get-away and even better  investment, check it out. Only 6 hours away from those cities, but miles away in terms of life-style. It's also very into sustainable living, and finding a 'green' home is quite easy.

Sounds perfect for a vacation home, or, who knows, maybe a primary home as well. Sure beats the California prices.

Read more about second homes in Taos.

Bye-Bye Bargains in San Miguel Allende

San Miguel Allende... even the name is romantic. A village in Mexico that looks like those picturesque 17th century European towns, cobblestones and all. The doors on the street open to vast courtyards of wonderful villas. Food is deliciously Mexican and inexpensive. Help is easy to afford and obtain. No wonder a lot of American expats bought second homes or retired there over the past 15 years.

The good news is that the charm remains the same. But the sad news (for new buyers) is that the bargain prices have all but disappeared. According to my friend Marcy who just visited there,  before 9/11, one of the casas on the street would have been $50,000. Now it’s between $500,000 and 1 million. She reports that outside the village in two directions, they are building new estate homes, 30 in an area, starting at  $750,000.

Basically, if you didn’t buy in to San Miguel Allende three years ago, you may have missed it. Given the  length of a trip, it may only make sense for long-term stays like retirement, or winter living.  It's quite do-able, as long as you can pay the price. Otherwise,  it's time to check out the newest spots, like Los Cabos, where you can still buy in at $130k. Plus, you get ocean!

The Olympics Fall-out: From Utah to Turin

The Colorado papers recently pointed out that after an initial dip in prices following the 2002 Olympics, Park City real estate took off. Now, some 3 years later, the home prices are up 51%. The average home was $350K in 2002 and went to $530K in 2005. In addition to the fame that the Winter Olmypics brought to the area, people also discovered how easy it was to get to Utah. You can fly from the East Coast in the morning and be on the slopes by noon.

And the homes that are being built include resort living, as well as very upscale second home properties. The real question is whether this is repeatable. If it is, perhaps those looking for international ski property might consider checking into Turin. You certainly can't beat 51% growth in 3 years. Happy skiing.

Check here for some of the best in Park City.

Crested Butte Faces a Great Divide

One of my all-time favorite places for a second home for skiiers is Crested Butte, Colorado. They call themselves the last  great ski town, opting for the comforts of home and intimacy rather than the splash and flash of an Aspen. So it's no wonder that people there are a bit nervous at the idea of adding more lifts and more trails to the area.

It seems that the current owners of the ski resort, which includes great condos, undeveloped lots and fabulous homes, is looking to add ski lifts to the Snodgrass Mountain Forest Area. Of course, there's lots of reason that the environmental impact will preclude this, but the other issue is whether the additional lifts will actually draw more people. In either case, the real estate market is quite hot there right now, with people buying their vacation homes in hopes of expansion. Which is a win-win situation--since whether it expands or not, you wind up with a second home in the last great ski town...or, maybe former last great ski town, depending on how it all goes. Check it out!

Heads-up on Fixer-Up

It is sometimes tempting to go for a fixer-up for that second-home, especially if it's in one of the more historic, quaint areas. However, an article caught my attention the other day from Denver. It seems that when one person wanted to tear down down an old house and develop it (commercially), the town stepped in and designated the 130-year-old house a historic landmoark. The editorial made the point that when the government says property is a blight, they fix it up and call it urban renewal; when you think it's a blight and "they" don't, they call it historic preservation.

Musing about it, two points come to mind. One is the relationship between local governments and property owners. We are always walking a fine line between our rugged indivualism,  wanting to do what we want, versus a government who watches out for the greater good.  The second question arises about preservation. It seems all to often as a society we are ready to tear down the old and bring in the new. But at what cost? What tradtiion do we want to preserve so there is a sense of history, a sense of place?

My sympathies are with the property owner; but my sense is that the local government is acting in the best interests for all, which is much harder for each of us to do on our own. What do you think?