We’re here reporting from the Westin Oaks Galleria at the National Association of Real Estate Editors Houston conference where we’ve heard from some exceptional experts in second home and vacation real estate, including Natalie Binder of Telluride Rentals, Ben Jenkins of Land Advisors & Resort Solutions, and Matey Veissi, founder of Veissi & Associates.
Each of these professionals offered interesting perspectives on the vacation and second home market for 2014, which is one where buyers, developers, and investors are cautiously rebuilding after the economic downturn.
The most interesting part of the panel discussion focused around international buyers, in which Veissi said China is looking at U.S. destinations more and more, especially those in Florida, as their population ages.
“China is now looking to the U.S.,” Veissi said. “They want to see how we’re developing senior communities.”
Veissi says 42 percent of Miami-Dade condo buyers are international, a whopping share of a market where there is a 6 month inventory of condos with 27,000 more in the pipeline.
“I have clients who come into the U.S. and they look to buy an investment,” she said. “Many of them , when they buy, they’re also looking for a place to possibly retire to.”
These international buyers, as well as many second home purchasers, are paying all cash in the post-recession market, one in which financing a vacation property is an uphill battle.
Jenkins, whose projects include several resort locations across the U.S., as well as Central America and the Carribbean, says that golf communities are shrinking, but the “rubber tire” resort market that is within a two- to three-hour drive from home is booming, especially those locations that have family friendly amenities, including nature trails with an eye to conservation.
And Binder, who manages luxury rentals in Telluride, says that while many vacationers weren’t leasing higher end properties during the downturn, eschewing more conspicuous locations, now Binder is seeing $4,000- to $7,000-a-night vacation rentals completely booked. And the market is very competitive.
“We’ve definitely seen one of the best winters,” Binder said. “It’s come back strong. There’s also lots of festivals during the summer. Our sales tax revenues are up, so people are shopping and spending more in restaurants, too.”
Veissi agrees, saying that just as the downturn seemed an unstoppable financial freefall, the resurgence in sales has had similar momentum. However, developers are now asking for 50 to 75 percent down before construction, which is insurance in case a buyer backs out.
And while international investors have great visions for U.S. second home properties, domestic investment just isn’t there. That’s something the whole panel agreed on, in fact, and Veissi considers it an “interesting contradiction.”
What are the major challenges facing the second home market? Capital is a big one, but flood insurance is a boondoggle in Florida, Veissi said. According to Binder, fraudulent listings are a huge problem, too. And of course, visionary leadership and a general aversion to risk is also problematic. Hey, at least homes everywhere aren’t falling into lakes like this one, right?
On the upside, Jenkins says domestic second home investments are on the upswing as it is becoming more socially acceptable to spend on vacation homes again. Popular markets include Lake Tahoe, Hilton Head, Florida, Park City, Asheville, and Hawaii, Jenkins said.
And they all take cash.