Gulf Shores. Destin (Watercolor, Seaside, Alys Beach and Rosemary Beach). Port Aransas — Cinnamon Shore. Galveston. Fredericksburg and The Texas Hill Country. South Padre. Lakes such as Cedar Creek, Cypress Springs and my newest passion, Lake Richland Chambers. Those are the favorite vacation spots for Dallas/Fort Worth, at least according to a recent piece in the Wall Street Journal that tells us buyers are once again snapping up second homes.
Sea change from the past decade when people bought vacation homes on either coast, near tourist destinations such as Orlando, Florida’s Walt Disney World (this I never understood, $8 million homes in Orlando?), Las Vegas, Coeur D’Alene Idaho and Spanish Peaks near Big Sky, Montana, both of which have entered into the chapters of bankruptcy. Today’s vacation home buyer is older, though affluent families are still buying, wanting a wholesome getaway for the kids). They want to be closer to home and spend less, get less glitz. They also want to buy a home that could convert to a retirement home. That is, a year-round home in perhaps a quieter area with a state-of-the-art medical center nearby. More from the NAR: 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
Here’s how Jed Kolko, chief economist at Trulia Inc., puts it:”people choose second homes that are a shorter drive rather than a plane flight away.”
Whether it’s because of rising gas prices or they are fed up with the TSA or escalating cost of flying (airfares are up 14% this year), a survey by the National Association of Realtors found that the median distance between a buyer’s primary residence and his vacation home actually declined 19% to 305 miles in 2011 from 2010. And that’s the first time the mileage has declined since the group began keeping data in 2006.
People want to stay within driving distance, says Jon Gray, vice president of HomeAway.com, because they’re more able to maintain the homes, they have better networks in place and friends and family nearby to use and sustain the homes. A March survey by HomeAway Inc. found that the most popular markets among vacationers are now those that can be reached in a drive of four hours or less from home. That then allows those folks to rent the homes, making them decent investments.
We have a place in the Texas Hill Country that is a good four hour trip. Personally, I think it’s too long, and others agree. Two hours is the preferred sweet spot. Better yet, forty-five minutes, which is why so many resorts are proliferating at Cedar Creek Lake 45 minutes east of Dallas. You’ve heard me talk about Beacon Hill. Soon you’ll be hearing more about another knock them dead community out there called Long Cove. The developer is Don McNamara, who helped develope CityPlace and West Village, and it boasts 1500 acres of untouched green beauty with a six mile waterfront on Cedar Creek, the fourth largest lake in Texas. Everything marketing director Josh Ellis told me about Long Cove fits right into this latest research: a lock and leave for home owners, luxury living with costs tamped down, no more golf communities, nature reserves, cottage style products for as little as $500,000.
When I hear $500,000 for a vacation home property, my ears perk up. It’s just do-able. Down in the Hill Country, one of my best bud agents and builder, Paul Summrall, tells me $700,000 to $800,000 is the sweet spot for the homes he’s building in The Preserve at Walnut Springs, though former Dallas Mayor Steve Bartlett went for the gold with his home.
Best of all, Beacon Hill and Long Cove are a 45 minute drive.
“You can go to the lake and still get back for a soccer game,” says Josh, “and that’s what buyers want.”
According to the Journal, today’s vacation-home buyers also are less affluent than in past years and way more cost-conscious. More ordinary vacation buyers coming into the marketplace, more people tabulating the whole package, including the expense of getting there, says Stan Humphries, chief economist over at Zillow.
Another reason why buyers are opening up: values of vacation homes continue to fall nationally, with median sales price declining 19%, to $121,300 between 2010 and 2011, so says the NAR. Even in Texas, prices may be holding steady but are not shooting stars. In fact, most experts say don’t buy a vacation home for appreciation; buy for sheer, pure enjoyment or as a future primary home. While buyers are benefitting from the downward spiral in vacation communities near cities, including beach towns in the Northeast, from Massachusetts to the Carolinas, as well as lakefront enclaves in the Midwest and desert locales in California such as the Coachella Valley, developers are hanging on for dear life. If they are well-financed, not leveraged, with a generous marketing budget, they’ll be around.
I spoke to a local real estate marketing exec last week who told me what we all know: the second home market is just plain ailing. The only way to move the properties, he thinks, will be to offer something very special to buyers — a green or nature aesthetic, perhaps like our shared ownership ranch concept or the nature reserve planned at Long Cove, the waterfalls going in at Beacon Hill. Golfing is nice, but it may be over and courses are expensive to maintain: the number of people who play golf in the US has declined by 13% and some courses are even shuttering. Golf club membership is down by a million! Even Paulson & Co., the hedge fund guru who made billions off the housing market crash, filed for chapter 11 reorganization on five high-profile golf resorts, including Grand Wailea Resort Hotel & Spa in Hawaii, the Arizona Biltmore Resort & Spa in Phoenix, Doral Golf Resort and Spa in Miami and PGA West in La Quinta, Calif. last February.
Some developers are going fractional, which sounds like a time share, but you get a deeded warranty that can be sold, passed on to your kids, basically treated like a club membership. As one homeowner said: “I work, so all I HAVE is four weeks a year to knock off at a place I just love. Any longer than that gets boring.”
Most buyers want water and mountains, so Florida coastal remains popular with vacation-home buyers around the world, Canadians (who are still buying in Mexico) and snowbirds who have to see sunshine sometime. More Florida buyers now are coming from neighboring states where they can drive in, including Texas, certainly more than a four hour drive. But Texas haunts continue to be all over Colorado, Park City, Utah, the Gulf coast of Florida, Gulf Shores, the Texas Coast, Hill Country, and increasingly, Palm Springs and San Diego.
I consider Santa Fe, New Mexico, a bedroom community of Dallas.
Toscana is a golf resort in Palm Springs I plan to visit soon. About the only place where anyone is playing golf is Palm Springs. And the developers tell me the place is loaded with Texans.