I don’t know how many divorcing couples own vacation homes. But I have a feeling it’s not a small number. After all, the latest numbers from the National Association of Realtors show that buyers purchased 502,000 vacation homes last year, an increase of 7 percent from the year before.

And I have a theory, actually, that I have seen played out among my friends: people often buy second homes in lieu of a divorce to create a separation, so they don’t have to live together. Actually, it’s a whole lot cheaper than a divorce.

But if you DO split, vacation homes can add a tricky wrinkle to divorce finances, especially in a community property state such as Texas. Who gets the vacation home when a marriage ends? What if the home is in a non-community property state or even in a different country? Good questions, ones you should be aware of before you buy, no matter who you plan to tuck away in that bungalow!

I queried Marcus McCue, senior vice president of Guardian Mortgage Company, and family law attorney Carol Wilson from Carol A. Wilson Law to learn more about the special issues surrounding second shelters and the D-word, divorce.

Candy: Let’s start first with a primary residence – how does that usually get dealt with in a divorce?

Marcus: Generally, our customers either sell the house or refinance it. They want the other person’s name off of the title (ownership) of the property and released from the mortgage obligation. We usually hear from our customers early in the process because they want to know their options, which is an important step when they are working on the details of the divorce.

Getting an individual name removed from the title of the home is a much more straightforward process than removing a borrower from a loan. To remove a borrower who is obligated to a current loan, that loan must be refinanced into the sole obligation of the spouse retaining the home. Once we have discussed the logistics of their options and the estimated rates, costs, and future monthly payments, our clients will call us back later after the agreements are in place to proceed with the preferred option.

Carol: While every divorcing couple is different, the analysis process is the same with a primary residence. I help my clients think through whether or not they will be able to maintain the home after the divorce and keep up with the mortgage payments. Often there will be less money in the household after the divorce. If they can’t afford the home, then they have to sell.

Many families with children want to keep the family home for them until they are older and/or in college. In this case, I often see both parents cooperate and reach a settlement to make that possible. Sometimes one spouse will agree to wait to get the equity out of the house until after the children have left.

In Texas, a couple can have a special contract – an Owelty Lien Agreement – such that one spouse will own the house, but the other will still retain rights to equity that was present in the house at the time of the divorce. This gives the first spouse the right to make improvements and to own the home, but the second spouse will get his or her share of the equity later when the kids are grown or the market improves or whatever reason the couple has chosen to wait. It is a win-win because the owner-spouse gets the benefit of all improvements and equity growth in the meantime, but the other spouse still gets the benefit of all the years of contributing to the equity when they were married.

Candy: So how is a vacation home different?

Marcus: If we are talking about a beach house in Corpus  Christi, then the matter is straight forward from our perspective. The couple sells or one person refinances the property in their name. As far as the mortgage company is concerned, any property acquired during the marriage is shared by both people. Whether one person paid for it with an inheritance or out of her own salary is an important difference.

Carol: Most of the drama is on my end! Obviously, people can feel emotional about their vacation homes and the sheltering of the children isn’t an issue here. so you see a lot more disagreements. Once the decisions have been made, however, it is straight-forward. According to Section 7.002 of the Texas Family Code, anywhere the State of Texas has jurisdiction over the couple, the judgment of the court holds sway. This is regardless of the family laws of that particular State or country that might be different from ours.

This means any State in the Union,Canada, Mexico and just about 75% of the world where the legal system is similar to ours will work like Texas. So your condo in St. Maarten is governed by the divorce decree as well as your mountain cabin in the Canadian Rockies. It is property to be divided, pure and simple.

Candy: You said about 75% of the world. Are there places where it is difficult to deal with property in a divorce?

Carol: Yes. Countries where the legal system is significantly different from ours can be impossible. In my practice, for example, I’ve worked with couples who had property in China and Taiwan. In those cases, there was no way to enforce the divorce decree and the property remained with one spouse. You’ll see this situation more with couples where one spouse has immigrated to the United States and has strong ties to the other country.

Also, some countries have strict laws against allowing money to leave their countries so even if you sell the property, the money can’t leave the country.

Candy: What else do couples with vacation homes need to think about?

Marcus: As always, there are key financial considerations to take into account when determining who gets the vacation house. The value of vacation homes is still falling. According to the National Association of Realtors, the median sales price of vacation homes fell to $121,300 in 2011. That’s down 19 percent from 2010.

The spouse that gets the vacation home, then, might be gaining an asset that has lost value. And no one can predict how much more value this asset might lose in the future.

And even when vacation homes rise in value, they can cause financial problems to their new owners. Remember, vacation homes are not eligible for the capital gains tax exclusion that comes with primary residences. Homeowners filing joint returns don’t have to pay taxes on the first $500,000 in gains that their primary homes sales fetch.

Again, this exclusion goes away when it comes to vacation homes, meaning that their owners have to pay taxes on the entire amount of gains they realize upon selling. Say a couple purchased a vacation home for $250,000. At the time of the divorce, this property is now worth $500,000. (Hey, we used to see such gains in the past on real estate. They could happen again, right?) If the new owner sells the vacation property, he or she will have to pay capital gains tax on the full $250,000 in gains. That can significantly lower the real financial value of the investment.

Candy: In this economy, that’s a high class problem to have!

Carol: As with most issues related to divorce, there is no single best way to handle vacation homes. Divorcing couples must take a long look at their finances, and consider how important the second home is to each of them, when deciding whether to sell the home or keep it.

It can be difficult for divorcing couples to compromise – ha! they are divorcing for a reason, after all – but when it comes to second homes, compromise really is the best solution.

The home featured above is in the heart of Seagrove Beach, near Seaside and Watercolor and Alys Beach on the Panhandle of Florida. 74 Majestica Circle has 6 bedrooms, four baths, 4292 square feet built in 2003. Still the house was recently renovated with new exterior hardi siding, paint, and a resurfaced pool. The home has surround sound and smart house technology, and security system though you will never need it. Entertaining mecca: large kitchen complete with Thermador and Sub Zero appliances open to dining area and living room. Three bedrooms on the first floor with large family room and bonus room complete with pool table. The carriage house has full kitchen, bath, bunk room, bedroom, and sitting area. Gulf-front on 30-A — I know, I’ve walked right by it — a short bike ride to Seaside and Rosemary at a remarkable price for this location: $2,895,000.

Questions about divorce and your second home? Contact Marcus McCue at 972-200-3380, marcusmccue@gmc-inc.com or on Facebook. Carol Wilson can be reached at 214-303-0142 or www.cawilsonlaw.com.

 

As my site’s tagline reads, “you can never have too many homes.” Apparently, many buyers and homeowners agree. The latest Investment and Vacation Home Buyers Survey from the National Association of Realtors reported that vacation-home sales rose 7 percent in 2011.

In all, as I may have told you, vacation-home sales accounted for a healthy 11 percent of all real estate transactions in 2011. Not bad for a still-sluggish housing market.

And look at this gorgeous property I just found in Dana Point, California: $2500 per square foot at The Strand.

Of course, buying a vacation home is one thing. Maintaining it is another. What if you live in Dallas and your vacation home is in North Carolina or Miami or this $25 million number on the west coast? How do you make sure the kitchen sink isn’t leaking or the windows aren’t broken when you’re hundreds of miles away?

Simple. (Well, not that simple.) You hire a concierge service. These services – also known as property management services — will watch over your second home while you’re away, make sure that the grass is mowed and the snow (if your second home resides in a chillier clime) is plowed.

I recently spoke with my mortgage guru Marcus McCue, senior vice president with the Plano office of Guardian Mortgage Company, about the steps owners of vacation homes can take to find the right concierge service for their second residences. Mortgage companies tend to like it when you take care of your property. Not only do many of his customers have second homes, his family also maintains a vacation home in Colorado – one of the top two states for second homes for Texans.

Candy: First, why do you think the vacation-home market has remained so strong even during a slow time for primary real estate?

 Marcus: You have to consider the buyers in the second-home market. They are buying these homes because they want to, not because they need to. The economic slowdown obviously hasn’t hurt these people as much. They still have money to spend, and they want to spend it on vacation homes that they and their entire families can enjoy. Because of this, the second-home market isn’t as impacted by the ups and downs of the economy.

Candy: That’s exactly what we heard at NAREE. The second home market can be rather insulated. It’s easy to enjoy a vacation home while you’re there. But what about when you’re not? That’s the challenge, right, maintaining these homes when you live across the country from them?

Marcus: That can be a challenge. You need to hire a concierge or property management company to take over the day-to-day maintenance of these second homes. You can do little when you live hundreds of miles away. You can’t just leave and forget about that second home once your vacation is over. Who knows what can happen to that property when you’re not there?

Candy: A woman in Dallas has a second home in East Texas, very remote, and the thing BURNED — she didn’t even know it ’till she drove out there! What can the owners of vacation homes expect their concierge services to do for them?

Marcus: Basically, they do everything that you do for your primary residence. There’s the basic upkeep, of course, but they are also there to handle any emergencies. Maybe a front window gets broken. They’ll take care of it. If there’s a leak in your home, they’ll handle it. Need someone to open the gate for a furniture delivery? Your concierge has the keys.

Candy: What about handling rentals? Many owners of vacation homes rent out those homes when they’re not using them. Concierge services can help with that, too, right?

Marcus: Definitely. Good ones screen renters and set up their schedules. They collect the rent and arrange for cleaning afterwards. Plus, they check the home for damage after a stay.

Candy: What questions should vacation-home owners ask when they’re investigating concierge or property management companies?

Marcus: First, ask a company how long it’s been in business. You want to work with a service that has a lot of experience. The more experience a concierge service has, the more prepared it will be to react to any problem. Also, make sure to ask how long a concierge service has worked in your vacation-home market. You don’t want to work with a company that may have many years of experience but has never tried to rent out a condo or home in your vacation home’s neighborhood.

Owners should ask, too, for a complete rundown of concierge services’ fees and what services come with these costs. They should ask how a concierge company will market their vacation homes. That’s important when it comes to securing renters. Finally, ask services how often they’ll check on your vacation property. Ask if they’ll do a complete walk-through after each group of renters checks out.

Candy: Do you have anyone you recommend?

Marcus: There aren’t any nationwide concierge services so you need to find one near your vacation home. In Colorado, I can recommend The Grand Concierge in Winter Park and Frias Properties in Aspen.

Candy: Thanks, Marcus. This conversation makes me want to take another vacation. I think it’s time we checked out YOUR second home in Colorado!

If you have questions about buying, financing and maintaining a second home, feel free to contact Marcus McCue at 972-200-3380, marcusmccue@gmc-inc.com or on Facebook.

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.

 

Great piece in the New York Times recently telling you what I’ve been telling you: wealthy buyers are out snapping up deals on vacation properties. This is probably the best time ever to buy a second home. As the experts tell us, don’t buy it for any reason other than to enjoy and use it. Of course, you can always lease it out for income-producing property. According to the National Association of Realtors, Miami sales were up 34.1% this September compared to last year. And while prices are bargain-basement, buyers are biting as much as or more than they did in 2005:

“According to a separate report by the Miami Association of Realtors released last month, sales in Miami were on pace to hit 29,000 this year, higher than the record set in 2005. That said, prices are nowhere near what they were in those frothier days. While condo prices rose 17 percent in September, they were coming off a very low base; prices for single-family homes continued to fall, down 6 percent to $131,000.”

And in Miami, 63% of buyers paid cash for these homes, compared to 30% of the buyers financing second homes in the rest of the country. Buyers are looking at bargains in Phoenix, California and, agents tell me, Dallas, too: buyers are flocking in to Dallas from Mexico and South America, buying up condos and boosting the market. Of course, they all want bargains, and many feel property is a great hedge against future inflation:

Marlon Young, chief executive of HSBC’s private bank in the Americas, said many of his wealthy clients in Latin America, particularly Brazil, were buying upward of 20 properties in hard-hit vacation areas like Florida and California just for this reason.

“They’ve increased their exposure to real estate from 10 to 15 percent to 15 to 30 percent” of their overall portfolios, Mr. Young said, adding, “If you can buy real estate at or just slightly above replacement cost, that is a screaming buy for these clients. They’re not new to the real estate market.”

Walnut Springs

If you want to look at a market that makes residential real estate even in say, Detroit look good, look at second homes. Last year, the median price of a vacation home in the U.S. fell 11%. Compare that to what the National Association of Realtors tells us the ordinary primary residence did — fell 5 percent. This according to the group’s annual Investment and Vacation Home Buyers Survey, or almost 2000 buyers. That’s a pretty small sampling, actually. Exact figures on the number of second homeowners in this country are hard to find because no one, not even the NAR, tabulates them. (Even the Census Bureau got confused when it noted so many empty homes in Florida -duh!) Wade Shealy over at 3rdHome.com estimates there are 50 million vacation homes in the world, and ten million in the US alone. That’s lake homes, ski homes, beach condos. Still, some Realtors say the bargains are so plentiful right now, buyers are scooping up deals for $100,000 and under. And even more, people who lease their primary home are looking to buy a second home, which makes perfect sense if you live in a high-cost urban area such as New York or San Francisco.

In fact, I know contemporaries in Dallas right now who plan to do the same: lease in Dallas and make a country home their primary.

Financial experts tell us to be cautious: every home has financial implications over and above the mortgage such as taxes, maintenance, and insurance. If you have a financial reversal — job loss or illness, what would happen to your second home, particularly in a market where vacation homes are not selling overnight?

You can lease it, of course. Be prepared to dish out a management fee and suffer extra wear and tear on the home and furniture. And oh yes — I hope the scent of curry doesn’t bother you! But hey, leasing pays the bills. According to HomeAway.com, that online candy shop for vacation home rentals, 48% of vacation home owners rent out their homes to cover 75% of their mortgage.

The better the location, and lower the price, the faster the home will lease. Take a place like Carmel, CA: the week of Concours in Pebble Beach, there are zero homes available in Carmel to lease. Vacation renters want the same things you do from a second home: location — near a fun activity such as water, ski mountains, a lake or event. If ski, the closer the home is to the lifts (ski-in, ski-out), the better. Water properties should not be ten miles from the beach! You can stick near the recession-proof markets, such as Aspen and Destin, but keep in mind that, as one Martha’s Vineyard agent recently told me, rich people can afford to hang onto their second homes for longer because they have deeper pockets.

Another thing to consider when you buy: would your property appeal to foreign renters? Foreigners are buying up larger swaths of U.S. real estate as our prices plummet. It never ceases to amaze me how foreigners flock to Orlando as a destination, whereas I’d take the Gulf coast any day. Real estate is soft in Maine but the Canadians lease beach cottages there years in advance.

Proximity: most people want to drive to their second homes and think a two hour drive is just fine, thank you. Our four hour trek to the Hill Country makes me cringe, but then we get on the road and the time flies. My rule of thumb: if you are not a multi-millionaire, anything over four hours that requires air lift should be a fractional. You just are not going to use it that often.

A trend I am seeing: baby boomers buying vacation homes or sites now to use as a primary home later, post retiement. If you have a lot of equity in your home, you can sell it and use the equity to have two homes. That depends, of course, on your market and the economy.

Finally, never fall for “love at first sight”. That is, do not go somewhere, fall in love with the location, and buy on the spot. Visit the area a minimum of three times in various seasons before you sign on the dotted.

I know Case Shiller is spreading real estate doom and gloom across the state lines, but it’s summer and most of us have vacation on the mind. Here in Dallas, it is about 110 degrees in the shade, and anyone who doesn’t understand why I started a second home blog IN THIS CITY is suffering from heat stroke. A second home all but comes with a Texas drivers license, or at least, it should. The good news is that this really is the best time ever to buy that second vacation home, particularly in the middle market price range. While home prices are still falling in most regions, (I’m looking at you, Santa Fe) the luxury segment is picking up steam. Or, at least, buyers. If you measure traffic by calls and lookers (not hookers), brokers are reporting more inquiries than they have had in years. In bellwethers Vail, Hilton Head and Palm Beach, foot traffic has jumped by at least 30% this year, according to local real-estate agents.

Should you buy? Yes, IF you are not the one of every five Americans who is unemployed, IF you can afford it, and IF you plan to keep the property for a long time. In fact, the experts themselves are buying.

As I blogged from Inman Real Estate Connect in San Francisco on Friday,  Doug Duncan, VP and Chief Economist over at Fannie Mae spoke on an Economic Outlook panel and told us he’s just bought a home in Florida. Vacation markets that once were priced out of sight are coming back to a reasonable range. Take Hilton Head Island, S.C. The Wall Street Journal reports a three-bedroom home (between the Atlantic Ocean and Calibogue Sound) sold in April for $750,000, after having sold for $1.2 million in June 2006. In Vail, Colo., a three-bedroom home that fetched $3.3 million in 2008 sold in February for $2.5 million. I’m more in the under a million bracket, and I find these prices enticing.

Second home prices are definitely down. The National Association of Realtors says the median second-home price was $150,000 in 2010, down 11% from 2009, but down a whopping 25% from 2006 (peak of the steroidal market). What’s interesting is that while we all know the second home market is hurting more than even the primary home market, that’s still only three percentage points more of pain: the overall primary home market is down 22%. In fact Fannie Mae’s Duncan — the one with the new vacation home — says homes in the $5 million-plus range have held up the best.

 “At the top of the market, particularly luxury homes, prices have proven very elastic, and have sprung upward quickly,” he says.

Here’s proof in the pudding: Palm Beach Island, Fla., sales were up 50% in the year ending June 30. Hamptons transactions, on New York’s Long Island, jumped 59% in the second quarter from a year earlier despite worries about state income taxes. And Aspen, Colo., as I have told you, is almost on fire, with sales ending May 31 up 10%.

Location, Location, Location

I’m not saying it’s Miller Time. But if you are going to buy, here’s how to secure your value should real estate dip majorly: only buy properties in prime locations—on the water (Beacon Hill, Lake Cypress Springs) or near a ski slope, ski in and out preferred. There’s got to be something fun to do there besides sit. Homes in less desirable spots tend to languish on the market. It is hard as you-know-what to obtain second home financing, as most banks are wary of second-home mortgages, particularly “jumbo” loans above federally guaranteed limits. Ten percent of banks raised their standards on such loans last year, according to the Federal Reserve. And who knows what our friends in D.C. will do to mortgage interest on second homes — my guess is they’ll say adios to “gig the rich”.

So how do you gauge which vacation home areas will hold up and not tank during a recession? Check geography — natural amentities, water access, ski in or out, and activities. Look at places that are not overbuilt –Hilton Head, S.C. benefitted from tough restrictions on building, which kept inventories manageable and prices there have risen by 4% during the past year. Foreclosures are a great buy, but if an area is loaded with foreclosures, prices will continue to fall. Example: Gulf Shores. Of course, get a good enough buy and hold long enough, you may not care.

Experts say that over time, vacation-home markets don’t appreciate noticeably better than primary-home markets, so do not let anyone talk you into buying a vacation home for future appreciation. Homes on Martha’s Vineyard appreciated by 40.9% over the past 10 years, edging out Boston’s 40.5%. But Hilton Head’s 15% gain was outshadowed by nearby Charleston, S.C.’s 25.4% rise.

A vacation home is an investment in your family and mental well-being. It’s where you gather to create memories. More than 80% of second-home buyers surveyed by the National Association of Realtors in May reported that they bought vacation homes for sheer, pure consumption: just live in the house and enjoy it.

If you can gather up the dry powder from savings, or the sale of your primary home, you will sidestep the cumbersome and pesky mortgage process. (Listen to me: calling the mortgage process cumbersome and pesky!) Last year, 36% of vacation-home transactions were all-cash deals, up from 29% in 2009, according to the National Association of Realtors. 68% of all Miami homes are cash sales this year, also an increase, most of those buyers foreigners from Brazil. If you are paying cash, do not be afraid to haggle. One agent told me how the South American buyers gives her indigestion.

“They are not afraid to offer us half of what we are asking,” she says.  “Then they act coy and pretend they don’t speak English very well. But they are driving hard, hard bargains when it comes to numbers.”

And, it appears, succeeding. Here’s a listing in Seaside for $750,000.

PR panel at NAREE: pitching to a shrinking pool of real estate editors

Yes, I did. It ain’t happening overnight, not even next week. But sometime in the year 2013 is the magic number tossed out by the number-crunching experts as the year our real estate market finally recovers.

Economists who spoke at the “Mid-year Economic Update” panel at the National Association of Real Estate Editors meeting last week in San Antonio agreed that unemployment and the foreclosure inventory remain the biggest barriers to recovery as the US economy struggles for breath.

“The good news is that we’re in a recovery … but we’ve got a ways to go,” said Jed Smith, managing director of quantitative research for the National Association of Realtors.

Here’s a way to get a grasp on what happened back in 2008:  $14 trillion in wealth was wiped out, equivalent to the loss of about one year’s worth of income for all U.S. workers, said Smith. As he told me later, usually 40 banks are on the Fed’s “observation” list of being at-risk for failure.

There are now 900 banks on that list.

And here’s why Mr. Smith is now my new hero: he blamed a lack of job creation, unreasonably stringent lending standards, and depleted consumer confidence as contributors to the stagnant economy. Guess who’s court those balls fall in? The Obama administration.

Count on this: distressed home sales will sop up 35 percent of all home sales for the next two to three years as we try to reduce foreclosure inventory. In most areas, foreclosures and short sales will not get worse, but will not get better; we will just ripple along until the inventory clears.

What could hurt recovery? Plenty: congressional “reforms” that could lead to higher mortgage down payment requirements, tinkering with or dumping Fannie Mae and Freddie Mac, and eliminating the home mortgage tax deduction.

A terrorist attack? Political upheaval?

Uncertainty in the European credit markets is another wild card for the U.S. recovery, since many wealthy Europeans are buying U.S. real estate, particularly in Florida and New York City. (Though capital flight helps us, as we see from the Mexican buying spree in parts of Texas.) Smith suggested easing tourist visa policies as a way of creating more U.S. buyers. Good idea.

Every panelist agreed that Real Estate is a completely local story, and national “lump-em” reports such as Case-Shiller really hurt sales in the healthier markets. U.S. home prices are down, generally, but the actual market has been stable over the last three or four years. Smith expects annual sales of about 5 million for the next three to four years.

Mark Dotzour, chief economist for the Texas A&M Real Estate Center, never pulls any punches about this: government stimuli have delayed recovery, he believes. He doesn’t think we are in a double dip because we till have not yet hit bottom.

Using his diagrams, Dotzour tells us the RE market essentially “fell off a cliff,” but the government’s “lifeline” of programs is propping up the market artificially. He’s talking the homebuyer tax credit programs, “Cash for Clunkers” auto program, loan mod programs and Federal Reserve’s purchase of Treasury debt. He thinks the market would have come back faster if the government had not interevened. I love this Dotzour-ism:

“We like capitalism on the way up and socialism on the way down,” he said.

Dotzour is particulary critical of some price metric reporting. He says that if you separate none-foreclosure inventory from distressed, nonforeclosure properties have held a fairly constant price. But when we report metrics we lump everything, overlooking the differentiation between distressed and nondistressed homes.  And, “…not every city in this country is … Phoenix or Las Vegas.”

You’ve heard it before, we heard it again: we need jobs, cheap mortgages, and to clear “shadow inventory” of homes that have been foreclosed upon but haven’t yet been listed for sale. That shadow inventory is one thing that keeps prospective buyers in uncertainty and making low or no bids.

It’s really Miller time for landlords. If there’s one area where we can find price increases, look to the rental market, where Zillow’s Stan Humphries says demand will outpace supply. Between 1.2 million and 2.2 million homeowners are transitioning from owners to renters, and rental prices in almost all metros are expected to rise about 3.5 percent to 4 percent this year, he said. Steve Brown, who was also at NAREE on Thursday, said Dallas rental prices are already up such that it now costs $200 more per month to lease than own.

Humphries also thinks the homeownership rate may slip below the traditional standard of 64 to 65 percent, but once home prices stabilize, there will  be a resurgence of buyers.

Good news take-away: we’re moving in the right direction. The pending reduction in the conforming loan limit later this year (deep breath) should have only a modest impact on the market. We may be close to half-way through clearing out the foreclosures, according to Shaun M. White, vice president of corporate communications for Re/Max International, who said the nation has already seen about 3.5 million to 4 million foreclosure sales.

The bad news is not one expert at this conference thinks the market will improve in the next few months, and not one was particularly impressed with the Obama administration’s handling of the crisis. The federal homebuyer tax credit programs were ineffective, essentially “stealing” sales forward that would have occurred at a later time.  The market’s sustained declines should end in 2012-13, but we are not going to hit bottom until (foreclosure resales) have peaked, said Humphries, which he thinks should occur this year.

“It’s The Housing, Stupid.” What I hope someone writes on a wall somewhere in the White House.

Now that there is a pay wall at the Dallas Morning News — I do subscribe — I will try and give you a weekly re-cap of real estate news and a look/see at what our local market is doing. Let’s call it Good News/Bad News. Because, as we all know, just because the sky is falling in Maryland, it may not be here in Dallas. Here’s a piece I wrote on AOL, eager to show the world that housing is not blanket-ly bad. Because if you read the headlines Monday, you may have wanted to go back in bed and pull up the covers for another five years. Yahoo News: “Home Sales Tumble”. The National Association of Realtors says home sales tumbled 9.6 % and are at a 9 year low, which I guess is better than a ten year low.

“The housing market is still very depressed and a major drag on the economy, especially household net worth,” said Chris Christopher, a senior economist at IHS Global Insight in Lexington, Massachusetts.

Economists had expected a decline of only 4 percent, but 9.6 was greater than even the most pessimistic forecast in a Reuters survey of 53 economists. And it is making Dr. Doom  Bob Shiller almost look like an oracle.

And what good will an improving labor market be if plunging house prices keep upsetting economic stabilization?

Someone sure needs to plaster this sign at the next convention, Democratic and Republican: “It’s The Housing, Stupid.”

Thanks to continued downward pressure from foreclosures, NAR said the median national home price dropped 5.2 percent in February from a year earlier to $156,100, the lowest since April 2002.

“If the price declines persist, even with the job market recovery, that could hamper recovery in the housing market,” said Lawrence Yun, NAR’s trade group’s chief economist.

And that ticks me off because average homes sales actually increased over the last six months in five major Texas metropolitan markets — Austin, San Antonio, Houston, Dallas, Fort Worth — according to the Federal Reserve. I don’t care how much it bites elsewhere, there are signs of life in the Lone Star state that keep getting beaten down by the national doom drum.

Good news: that rise in Texas home sales comes for the first time since the expiration of the home buyer tax credit. And more good news: looking at January numbers, Texas home inventory is down, says the Federal Reserve. Back in December, it would have taken eight months to sell off all the inventory in the state. In January, that time frame fell to 7.7 percent. Experts say 6 months is a normal market and it looks like Texas real estate is inching closer and closer to normal.

As for foreclosures, it almost seems like they’ve taken a vacation in some Texas markets. Foreclosure filings in Dallas/Fort Worth were down 16 percent for April — foreclosure filings have to be posted a month ahead, so April’s numbers are now out. For the first few months of 2011, Dallas foreclosure filings are 4 percent lower than this time, last year. And that is significant because last year we were still euphoric on the first time home buyer’s credit.  Foreclosure filings were also down 20 percent in Collin County, and an area hit hard by foreclosures.

But George Roddy isn’t calling it Miller Time just yet. What still plagues is the high number of troubled loans across the state, and fallout from the foreclosure crisis is going to take a long time to wade through. More jobs would be the biggest help of all.

“Until a significant number of workers are absorbed back into the workforce,” says Roddy, ” we won’t see foreclosure postings decline.”

Bad news: the number of upside-down homes is up. Even though foreclosure postings are down, we are seeing a sharp increase in the percentage of residential postings in an upside-down position. The percentage of foreclosure postings on upside-down homes jumped 29 percent. A year ago April, only 21 percent of Dallas area homes were upside down.

You know what that means: The original mortgage amount exceeds the current value of the property. So the homeowner can not sell the home for what is owed on the mortgage and often, neither can the bank left toting the note.

Good news (kind of): CoreLogic recently estimated that 12 percent of Dallas homeowners owe more than their mortgages are worth. That is about half the nationwide rates of negative equity, and can be attributed to Texas law which limits how much a homeowner can borrow against their home. Me, I was perfectly happy when we couldn’t borrow squat against our homes.

Finally, I wonder when this administration is going to make some positive noises about home ownership. Isn’t it interesting that one of the hottest markets in the country is D.C?