The Second Home Muse

Fly or Drive to Vacation Homes

What's your preferred way to get to your vacation home? One recent survey released said 43 percent would drive an hour, while 29 percent would be willing to fly. This correlates well with a recent survey (not yet released) by EscapeHomes.com, which discovered that 61% would drive and 32% are willing to fly. The EscapeHomes survey definitively shows that the percentage of people willing to fly has been increasing.

One factor might be the cost of gas. It may also be affected by the demographics of the buyers. People consider driving when they have to take two kids, the dog and the cat on vacation. But if it's just 'us folks,', i.e., retired babyboomers, why not fly?  It will be interesting to watch these figures and see if they change as the demographics of vacation home owners change. The trend can also affect second home markets. For example, locations that are quite far from airports may find themselves less attractive if the trend to flying continues. This is what happened in the Catskills in New York, when it became easier to fly to Bermuda or the Caribbean than drive up to the mountains. Suddenly, a thriving vacation area turned to dust. Fly or drive? What do you say?

Real Estate Future(s)

Everyone has an opinion about the future of the real estate market. However, it was certainly interesting to read and hear one expert talk about the 'futures' of the real estate market. Given the speculative nature of some of the housing markets, it logically follows that a medium would rise up to be able to hedge your bets, so to speak. So now there is a  future's market at the Chicago Mercantile Exchange where you can "short" the Miami home market, for starters.

On a recent "Living on Earth" program on NPR, Yale economist Robert Shiller pointed out that the next round of speculative real estate is most likely to be the coastal areas. More importantly, he explains the challenges that coastal property faces due to the effects of global warming, including more storms and higher sea levels. That, coupled with an already challenging market, is what may make hedging your property the only way to place your bets. Another way... watch where you buy, and stay out of trouble. To me, that's a much safer bet.

Yurts: A Vacation Home Solution

So you bought that great piece of land in the woods, or overlooking the ocean, and now, you are just waiting for your ship to come in, so you can build a vacation home. Right? Well, perhaps not exactly that scenario, but it is true that getting land is much easier than building the house to go on it. So here's one thing to do while you're waiting... Get a Yurt, and enjoy the vacations starting right now.

It's getting easier and easier to get a really well-done, pre-fab yurt that will feel great. There are several companies in the market, including Rainier Yurts ($5K and up), Oregon Yurtworks, and Redsky Shelters. According to a recent Inman News article, yurts are not ideal for year-round living, since temperature control is not easily...no insulation, for one thing. However, I do have friends who have gone camping in Oregon, for example, where there are yurts for rent, and other friends who have put yurts up on property near Bodega Bay. And both feel that as a short-term vacation spot, they can't be beat.

If you already own a yurt, share your experiences with the rest of us. Perhaps there's more to learn about this old art of outdoor living.

San Diego Real Estate

I love to watch markets in places with a perfect climate, and it doesn't get too much more perfect than San Diego, California, a place with eternal spring. The LA Times ran a story about the dip in real estate there, making some interesting points. For one, the dip of 1% in the median price for the city this year isn't too much to write home about, as the interest rates are higher, making the net for the buyer not that much. Another point is that much of the dip is in the new single-family homes and new condos, dropping 8% since June 2005. Re-sale condos are falling but not that much.

However, the point remains: if prices go down, this is a great market to look at. A downtown condo for $187K, a two-bedroom town house for $309K are just some of what is coming in reach. The main lesson, taken from the last housing decline in San Diego in the 90's, is, be sure you can hold on for a long haul. As my friend Laura notes, "I thought for sure I'd retire in San Diego when I bought a town house for my then-college age kid at UCSD. Alas, the market fell at the same time he graduated, and I bailed out with a loss. If I held it, perhaps I'd be retired in that great climate right now."

Check out San Diego properties.

Second Home Specialists

I love it when my ideas are finally noticed (without credit to me, of course) by the media. Yesterday's San Francisco Chronicle had an article about the value-added benefits of specialized real estate agents. They cited one agent, who by virtue of her experience managing vacation rentals, can better advise people on how to buy and rent out their second home.

This principle of specializing has been a driving force behind the network of EscapeHomes Second Home Specialists (SHS). At first, we thought it would be "neat" to define a category of  agents that could really serve the second home community. However, "neat" quickly turned into "necessity" as we saw the vast set of knowledge that one needs in buying, owning and selling a vacation home...knowledge above and beyond typical real estate transactions. As the Chronicle article points out, in these days of 'do-it-yourself' everything, including real estate, there has to be value-added by the agents just to stay in business. We're glad we found one category, 'second home specialists,' that benefits everyone...buyer, seller and agents.

Vacation Rentals vs Resorts

Well, here is really a case of cutting off your nose to spite your face. The community of Big Bear Lake, California, is battling to severely restrict homeowners from renting their properties as vacation places. According to the article in the local paper, the proponents claim to protect peacefulness of the neighborhoods and local resort business. However, it is so illogical for a place which is primarily a resort location in the first place, to want to diminish its potential. I can understand these kind of battles in a more residential area. However, Big Bear is about ski resorts. It's about mountain fun. Why wouldn't you want to have vacation rentals?

The most compelling argument to me is the economic one. All local resorts benefit from vacation renters, if my own experience is common. For example, when I rented a place in Kauai, near the fabulous Princeville Resort, I was more than happy to eat my meals there, pay for their spa services, and generally make use of the facilities. While they didn't get my nightly  room fee, they got  plenty else, and meanwhile, could still fill up their hotel with other guests. The  best part is how they welcomed me, even though I wasn't a guest. So for Big Bear Lake, I suggest that the worried resort owners take a clue from Hawaii, try out  the Aloha spirit and see what happens.

Owner Financing Tips

Tom Kelley, author of "Cashing In on a Second Home in Mexico" offers some great tips for second home owners. In an article from Inman News yesterday, he points out that, especially for retired folks, getting a lump sum for that vacation home isn't the best idea. When it's time to let go of the home, perhaps because you don't use it, or the grandkids have other grand ideas, rather than cash out, become the banker. Then you have a monthly income which is pretty darn nice when you are retired.

Of course, being a banker isn't just a no-brainer. Tom gives some good tips, including asking for a pre-payment penalty; the right to approve the next  buyer, and, using a third-party collection agency to handle the collection and paper work. It seems to me that Tom is right on the money with this idea of owner-financing. It's a way of extending the cash flow that perhaps came from vacation rental income, without all the rest of the costs. If you do it smart, you can benefit yourself, as well as the buyer. Thanks, Tom, for good advice.

Half-Full, Half-Empty Home Buyers

It must be the old optimist/pessimist divide. How else do you explain that in the Florida market today, 42% think it's a good time to buy, 42% think it's a bad time to buy. According to a story run on Inman News, sales in Florida were down 24%, while prices were up 11%.  With mixed signals like that, no wonder homeowners there are having a hard time deciding if they should be optimistic or pessimistic. However, the optimists are still ahead, with 58% still thinking their home values will rise.

I guess when I read something like that, I sort of blink three times, scratch my head, and wonder, what's it really mean? Personally, if you are a homeowner and ready to sell, you'll sell, no matter what. If you are a buyer, and ready to buy, you'll buy. And if this isn't the time to make a move, no numbers will actually matter anyway. For example, if you have bought your home in Florida and are retired there now, does it matter if the price goes up or down? Personally, I don't think so. Maybe that's why there's a split...speculators versus those who have settled down. Anyway, I don't make up the news...I just share it, and muse on it. So there you have the latest from Florida.

Condo or Cottage?

The fun thing about a big report like the NAR second home survey is that it generates as many different views as there are statistics. I enjoyed reading one today from Milwaukee, which talks about buying condos versus cottages. The NAR report mentions that currently, condos are catching up with single homes as the preference for second homes: 32% compared to 35%.  However, the Milwaukee article points out that it depends on who you are talking about. In the Midwest, people are still opting for summer cottages, (42%)  compared to only 20% into condos.

Of course, you can argue that it's because there are probably more cottages than condos in the Midwest in the first place. But they also make the point that younger couples who buy second homes are trying to recreate their childhood memories of summer cottages, whereas baby boomers are looking for a much easier lifestyle, which the condo (no lawn, no maintenance) offers. The recent EscapeHomes survey of users shows that single family homes lead condos by 43% to 26%. My bet...we'll see the percentage of condos grow significantly in the future. Good place for investors to go today.

Check out some Midwestern towns here.

California Housing Market

Our agent on the scene in Northern California, Pam Buda,  continues to keep us informed about the local market. Here's her latest tip on selling your second home here: "The consensus seems to be that the best way to sell your home to net the highest dollars in the shortest time, is still to price at or 5% below market.  Market pricing reflects currently available inventory (the competition) and too much reliance on what happened 3-6 months ago can be misleading." She also forwarded a market report indicating that there is a shortage of good listings in the SF/Peninsula under the $1-1.5 mil. price range.

What is most interesting from Pam's report is that while the sales have slowed, well-priced houses are actually turning over quickly. In other words, a long time on the market is a reflection of inaccurate pricing, as prices are in a slow decline. Another way to say that from the buyers point of view, is that when there is a well-priced, good showing house, the buyers have having enough sense to grab it quickly.

Whether you are buying or selling, this is a time to be well-informed about the market, so you can price to sell, and buy it right-priced. Then, everyone is happy, no?