Tuesday, May 01, 2007

2006 Vacation Homes Sales Were Up

Vacation-home sales rose 4.7 percent last year to a record 1.07 million -- one category of the housing market that defied the 2006 downturn, the National Association of Realtors said Monday.

The median price of vacation homes slipped 2 percent to $200,000, helping to keep sales rising as buyers found more listings and discounted deals.

The Realtor trade group's national survey also showed that homes bought for investment purposes fell nearly 29 percent to 1.65 million from a record 2.32 million in 2005, while the median price of those homes plunged 18 percent to $150,000.

Investment homes accounted for 22 percent of all existing-home sales nationally last year, down from 28 percent in 2005. Vacation-home sales rose to 14 percent of the total from 12 percent.

The survey did not break out the numbers by states or metro areas, but in the Orlando area, vacation homes are typically investment homes as well, and sales in Central Florida have been held down by a number of factors, according to local agents who specialize in vacation properties.

"The rocket ran out of gas," said Steve Schaffer, a partner in Dolby Properties Inc., an Orlando real estate company that specializes in vacation-home and second-home sales.

"After Hurricane Katrina [in 2005], sales started to drop," and they continued falling throughout 2006, Schaffer said.

Many international buyers, after helping the Orlando and Walt Disney World vacation-home markets thrive in recent years, were frightened by Katrina, which struck South Florida before hammering the Gulf Coast and flooding New Orleans in August 2005.

In recent months, local vacation-homes sales have continued to suffer from the same list of issues that have depressed other Florida home sales, including a glut of new listings and higher property taxes and insurance costs.

Although the national vacation-home survey attempted to differentiate between pure investment homes and vacation homes, there is some overlap. In the Orlando area, local Realtors say, more than 90 percent of the vacation homes bought and sold are rental investments as well.

Nationally, about 18 percent of vacation-home buyers cite rental income as one of their reasons for buying.

Many of the Orlando-area vacation homes acquired in recent years were purchased with various types of adjustable-rate mortgages, and as those have adjusted upward, more vacation-rental homes have been listed for sale, adding to the area's record inventory, according to local agents.

David Lereah, chief economist for the National Association of Realtors, said the drop in investment-home sales nationally was expected because speculators left the market as home-price appreciation cooled.

The rise in vacation-home sales was based on "strong demographic and lifestyle factors," he said, as large numbers of consumers are in their prime buying ages and want recreational property for personal use, with investment potential as a secondary consideration.
Courtesy of Orlando Sentinel 5/1/07.