Those of us in real estate know that when the housing market plummets,  vacation places plummet the most. Second homes are most often discretionary purchases you wait on until you feel flush with cash.

Well, get ready. Realtors say second-home buyers are returning to the store,  shopping from Cape Cod to Lake Tahoe. As I told you, nationwide vacation home sales rose 7% in 2011 to 502,000 homes, according to the National Association of Realtors. They made up 11% of total sales in 2011, more than they did in 2010.  And NAR’s spokesman Walter Molony, who I hope to see in Denver next week at NAREE, expects continued momentum.

“We’ve heard positive reports from Las Vegas, Telluride, Col., Lake Tahoe, Naples, Fla., and some areas of California,” he told Investor’s Daily. “We’ve been seeing a little bit of unleashing of pent-up demand.”

Well yes, that plus bargain prices.

But while the number of transactions is increasing, vacation home prices are still not generally appreciating. The healthiest segment of the market is, surprise surprise, upper-end properties: the luxury market.

Neal Hanks, an Asheville, N.C. agent says he is seeing significant increases in sales of homes in excess of $500,000 in the Blue Ridge Mountains.

I hear the Florida market is even tightening up. No Girls Gone Wild, but firming. The recent death of my brother-in-law has me poking into the Naples market, where they own two homes. In nearby Sarasota, Manatee and Charlotte counties, inventory is just 4.7 months, the lowest since 2005.

In Southwest Florida,  broker associate Jennifer Calenda of Michael Saunders & Co., a luxury regional real estate firm affiliated with Ebby Halliday through Luxury Portfolio, says dollar volume sales are up. Prices are not going up, but people are buying about $100,000 over where they were — so folks looking at a $300,000 condo might spring for $400,000. Are people really feeling more flush, more confident, or just sick of depriving themselves?

Some feel people are getting back on their feet, paying off debt, and I think I read that American’s debt levels were decreasing. David Southworth, founder and CEO of Southworth Development, which specializes in upscale vacation-resort communities, says demand is coming back as people get on their feet.

“The second-home market is always a trickle-up type,” he told Investor’s Business Daily. “As the economy gets better that means small business owners start making money again and executives start getting bigger bonuses. And that’s when our customers come back.”

“During the past year, investors have been swooping into the market to take advantage of bargain home prices,” said NAR Chief Economist Lawrence Yun . “Rising rental income easily beat cash sitting in banks as an added inducement.”

The median vacation-home price was $121,300, down 19.1 percent from $150,000 in 2010.

The typical vacation-home buyer was 50 years old, had a median household income of $88,600 and purchased a property that was a median distance of 305 miles from the primary residence; 35 percent of vacation homes were within 100 miles and 37 percent were more than 500 miles. Buyers plan to own their recreational property for a median of 10 years.

Eighty-two percent of vacation-home buyers said the primary reason for buying was to use the property themselves for vacations, or as a family retreat. Thirty percent plan to use the property as a primary residence in the future, while only 22 percent plan to rent to others.

Forty-two percent of vacation homes purchased last year were in the South, 30 percent in the West, 15 percent in the Northeast and 12 percent in the Midwest; Only 1 percent were located outside of the U.S.

They’re not all back. Southworth recently bought some communities on the cheap after the real estate bubble burst: Creighton Farms in Virginia horse country and most recently Willowbend in Cape Cod. Willowbend is doing the best, because of 8 million in metro Boston who can drive there. Most second home owners prefer to drive to their vacation homes, on average about 4 hours, but most often one or two.

Next week, I’ll hear more about Longcove at Cedar Creek Lake east of Dallas: 45 minutes east of Dallas.

The segment doing the best is the high end of the vacation market, this according to Brent Herrington, senior vice president of luxury developer DMB Associates.

“Inventory is much scarcer in the most desirable locations,” he said. “Prices are firming … we’re getting back to a world of multiple offers.”

Those amazing deals in the tops spots of the Hamptons, Martha’s Vineyard, Aspen and Vail peaked in hit in 2010-11. If you didn’t do it then, or are not quite in that league, look for the secondary markets — beachfront but not the name-drop locations.

After a few decades of recession, Palm Springs is becoming a hot second home market, beating out Santa Fe, say some realtors. And the developers are there to give buyers what they want: sun and out here, golf.

“We find our buyers appreciate all the things that Palm Springs and Indian Wells has to offer – the relaxed, resort atmosphere, no traffic concerns, friendly service, warm winters, incredible views and an abundance of outdoor activities, “ says Bill Bone, CEO and Founder of Sunrise Company, developer of Toscana, a golf community development in Indian Wells.

There is golf of course but also hiking, biking, farmer’s markets, as well as great shopping, dining, entertainment, the arts and medical facilities.

“Members have so much fun here, they call it “Camp Toscana”, says Bone. “We are very pleased with our sales results this year: have been 34 homes sold at Toscana, more than $59,000,000 in total sales.”

 

Palm Springs is within close proximity to sooo many Cali locales – less than 2 hours from LA, Laguna, San Diego, Palm Springs is brimming with mid century architecture, history and development.

“It appeals to people who really value properties of that era, and the new boutique hotels and restaurants keep things fun and interesting,” say Palm Springs agents Mark Godson and James Dalton Utsey. “The evolution of our downtown strip continues with the Fashion Plaza being rebuilt as a pedestrian friendly shopping and gathering place.”

 

Like many areas in California, Palm Springs was not spared during the housing bust, but values are beginning to inch up. Don’t have to worry about hurricanes here. Look carefully there are deals to be found.

 

Many consumers buy thinking they can rent out the home for cash flow and potential income, and they can. Vacation home rental listings are up at the website HomeAway. It had 433,000 listings in 2009, but 700,0000 listings now, says its vice president, Jon Gray.

Buyers are stirring, multiple offers are being reported, but there are no indications of appreciation. In some areas, prices are still falling. Do not be afraid to make an offer below asking: U.S. vacation home asking prices dropped 1.7% year over year in the 12 months ending in April, as overall listing prices fell 0.2%.

I do not advise buying a vacation home for pure appreciation. Just look for family enjoyment and maybe a place to rent out.

Still, some areas are seeing a tweak upwards when the distressed properties are all sold out. And demographics may be favorable for long term growth in vacation homes, with the average buyer age 50. There are 42 million people 50 to 59, right behind them are 43.5 million 40 to 49. Then there are 40.2 million people 30 to 39. These people grew up with vacation homes as common as swingsets and may follow their parents’ footsteps in buying.

 

Get this: Austin has an unemployment rate of only 6.7%. That could be why, except for South Padre Island, Austin now has the highest priced median homes in Texas: $194,600, according to the Real Estate center at Texas A&M University. Sales of existing single-family Texas homes in August were up 24 percent from a year ago, according to the most recent Multiple Listing Services (MLS) data compiled by the Real Estate Center at Texas A&M University. More than 21,200 existing single-family homes were sold, data showed. The median home price was $153,200, about the same as a year ago, and the state’s overall inventory was at 7.4 months.

So why is our little sister city to the south, the one often equated with San Francisco, kicking butt in the real estate market? I reached out to my friends at Realty Austin, an Austin real estate firm. Here’s what agent Brittanie Flegle has to say:

Based on the latest financial news, one might assume that very few people are purchasing homes this year.  However, you might be surprised to know that in Austin, July and August home sales reached record highs.  In fact, July marked the best month for Austin real estate in over 2 years!  Here is a snapshot of the Austin real estate market as compared to one year ago.

  • $524,492,455 – Total dollar volume of single-family homes sold, 23% more than July 2010.
  • $196,750 – Median price for single-family homes, 11% less than July 2010.
  • 1,973 – Single-family homes sold, 32% more than July 2010.
  • 205 – Condos and townhomes sold, 45% more than July 2010.
  • 77 – Days on market, 5% longer than July 2010.
  • 2,808 – New single-family home listings on the market, 13% less than July 2010.
  • 9,393 – Active single-family home listings on the market, 20% less than July 2010.
  • 1,994 – Pending sales for single-family homes, 28% more than July 2010.

All of those total to a 32% increase in year over year home sales. This can be explained by the sharp decrease that occurred when Federal homebuyer tax credits expired on June 30, 2010. However, there are several other positive factors driving the Austin real estate market.  These include:

  • Record low mortgage rates
  • Stable home values
  • An unemployment rate of only 6.7%
  • A limited supply of new and resale homes for the 56,000 people expected to move in 2011

One great example of an Austin community that has seen lots of growth in the past year is Scofield Farms. Price points: $300K.  Located in North Austin, it has quickly become one of Austin’s most sought-after neighborhoods for new Austinites and their families.  Scofield farms realtor Jenny Walker agrees. “Scofield is great for families because it is a very close knit community.  Neighbors really look out for one another here.  Scofield is also within walking distance of great schools and near high-tech employers like Dell, Samsung, and IBM” Jenny says.

On the other hand, if you’re in the market to sell, keep in mind that there are 20% fewer homes on the Austin market than there were at this same time last year.  In short, this means significantly less competition for those selling homes.

After a challenging year in real estate, the Austin market seems to be back and holding strong.  How do you spell a healthy real estate market? JOBS!


On CandysDirt,  I told you about Al and Erin Hill, that’s Al Three, who recently moved their family to Atlanta. They bought a $9 million dollar estate in swanky Buckhead (think Highland Park on Strait Lane in Dallas), closed on it in July. Last spring, the couple had some legal problems involving a $200,000 HELOC — home equity — loan on their Highland Park home. A Dallas grand jury made some serious charges: three counts of making a false statement to obtain property or credit and one count of securing execution of a document by deception against the 40-year-old Hunt oil heir. Erin Hill, age 38, was charged with two counts of making a false statement and one of securing execution of a document by deception. The indictments centered on $200,000 (really, a drop in the bucket) from OmniAmerican Bank taken out in 2009 when they claimed to be sole owners of their $1.9 million Highland Park home: majority interest in the Highland Park home is owned by the Albert Hill Trust, the young couple only owns about 20%. There were some charges too about false statements and “securing execution of a document by deception.”  At the time, Al Three did not have legal representation.

Here’s what my sources tell me: Al Three recently fought to change the trustee of his trust, and he likely convinced the trustee to buy the $9 million Atlanta estate on his behalf. (Taxes on that spread are a mere $50,000 a year — what is Georgia doing right about real estate taxes that Texas is doing wrong?) Sources tell me his legal fees in Dallas have eclipsed $70mm, and certain very generous Dallas friends are chipping in to cover those.

4433 Bordeaux, Dallas

This is a very sad story for the family, and I hate to even have to report it. (If I don’t, someone else will.) My heart goes out to them and I truly hope they can find peace with each other someday — life is really too short. Careful readers will recall when I told you the Hills dismissed their Dallas household staff in July, paid them in full, and handed out letters of recommendation. Some of the staff has complained that when prospective employers contacted the Hills for references, as promised, they got nada. Seems like they are really trying to cut all ties with Dallas.

Now I wonder if the next purchase is a second home down in Destin?

Changes coming over at Lakewood Shopping Center than could positively impact local homeowners. Steve Brown is reporting that Lincoln Property Co. bought the central block of the Lakewood retail district at Abrams Road and Gaston Avenue,  60,000-square-feet that houses the Dixie House and the cozy Lakewood Ace Hardware.

This property has been owned for years by the Corrigan family, and was originally built in 1939.

Recently, restaurateur Matt’s Rancho Martinez announced it has lost its lease and will be moving to another nearby location in 2012. A Mi Cocina restaurant will take over the building that housed Rancho Martinez for 27 years.

Lincoln, one of the city’s oldest developers, built the Old Town shopping center on Greenville Avenue and is a partner to redevelop the Village on the Parkway retail center in Addison, aka Sakowitz Village — if that doesn’t show my age!. According to Brown’s report, Lincoln officials say they have no major fancy-pants plans in store for the shopping center, but with the strength of the Lakewood real estate market, a little spruce-up might be in store.

I was talking to Chris Bright yesterday, checking in to see how the million dollar movie he made and launched Saturday at the Dallas Film Festival is doing for business. “Cooper & The Castle Hills Gang” was also shown up at Castle Hills Saturday night, then let loose on the internet to go viral. The whole thing started, he told me, with the idea of just making a video to market the 2500 acre home development and before Chris could say Dennis the Menace, he had a production on his hands with real actors.

Chris told me that since the movie hit the web, they’ve tracked a 30 percent increase in traffic to the Castle Hills site — and that was just yesterday.