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.


The price has been slashed from $16 million to just $11.5 for this amazing ranch spread one hour and a half north of the sleepy Ketchum/Sun Valley ski community of Hemingway fame. Located in the tiny town of Stanley, Idaho, and how cute is that name? (Not to be Debbie Downer, but Hemingway did commit suicide in Ketchum, which is really the town’s only claim to fame.) Prices soft in the Sun Valley environs these days; I hear there are tons of deals to steal.

But I digress. This piece of private paradise known as Robinson Bar Ranch on 128 acres is worth selling a few shares of commodities or gold bars to snap up while it’s still available. Now I know why all millionaires buy Idaho ranches: the property taxes on this puppy are only $3542 a year — totally serious! The ranch is located within the 756,000 acre Sawtooth National Recreation Area, one of the largest in the nation. The Robinson Bar Ranch land was acquired by Chase A. Clark in 1900, who operated it as a guest ranch and resort. Chase became Governor of Idaho and a Supreme Court Justice and a relative, Bethine Clark, married U.S. Senator Frank Church. The ranch has been the 29-year residence of singer/songwriter, Carole King, who purchased it from the Clark family. Talk about positive karma, click here: you won’t believe the interiors! It is located on a private “end of the road” setting surrounded by road less mountain ranges. You want solitude and peace away from humanity? Well, here it is. The ranch is virtually an island in a “sea” of unroaded federal land.

The spread includes a beautifully restored 7,337 sq. ft. lodge, an owner’s residence overlooking Warm Springs Creek, a caretaker’s home, guest cabins, equestrian facilities, a greenhouse, and of course a professional recording studio. There is a gorgeous hot water pool complex of a swimming pool and a soaking pool, rock-lined, the water at 135 degrees from a natural geothermal spring keeping the pool at 108 degrees. The same natural springs provide radiant heat for the lodge and studio. The property is surrounded by national forest lands and offers, well, everything you would expect for $11 million: private trails, an ecosystem rich with natural wild-life, panoramic mountain views and extensive live water with great fly fishing and white water rafting on the adjacent Salmon River. Of course the ranch is listed with ranch broker to the stars, Hall & Hall.

Update: this ranch first went on the market in 2006 at $19 million.

Graves of Ernest & Mary Hemingway, Ketchum

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.

Dear Tax Doctor:
What are the typical arguments that the city makes for raising the value of the improvement when there have been no upgrades to the property since the previous evaluation?  Also, what are the best counters to the city arguments other than comps.  Thank you.

Christopher McGuire, Vice President, Briggs Freeman | Sotheby’s International Realty

Dear Christopher,

If you see an increase to the improvement value of your home and no improvements were done to the home, it is likely due to an increase in the average selling price of comparable homes around you. The improvement value is the easiest value to increase and lower. Lowering/increasing land, on the other hand, is a far more difficult because it has the domino effect—change one and you must change them all.

Your best ammunition to fight this is to bring in Comparable Sales. Texas Law requires that the homes be appraised at 100% of market—nothing better indicates market than comparable sales. You can also bring in pictures showing condition issues, but you can’t argue condition every year—your home doesn’t depreciate THAT quickly.

Tiffany Hamil –PS folks! The deadline is next week for filing your property tax protests! That means you have only a few more days to ask the Tax Doctor!

A reader writes:

We are somewhat new homeowners living in Lake Highlands (75238) where the Dallas CAD has our property values all over the place.  Our home is not updated, except for one bathroom.  We are appraising on the CAD for $215K.  What is frustrating is that my next door neighbor (I have not been in his house), has a little more sq feet, new roof, and house looks great on the outside. His appraisal is $165K, so he is paying over $1,000 less in taxes a year.

My questions to you…

-Is it worth the time and effort to fight the appraisal?

-We did put a lot of sweat equity in our landscaping this past year, does that hurt us?  Are they actually driving by and making appraisals based on curb appeal?

-What is the best way to fight the appraisal?

I appreciate your insight, we are grateful to be homeowners but find it extremely discouraging when we see our neighbor’s homes with the $20K kitchen remodels, extra sq. footage, etc and know that we are paying more in taxes than they are.


  1. Is it worth the time and effort the fight the appraisal? Absolutely. Fighting your value will provide you savings not only for this year, but for future years. As property values begin to rise, keeping the tax base low will keep the 10% allowable increase correspondingly low.
  2. Landscaping won’t directly increase the value. Yes, the District does to drive-bys, but in large, the computer is mass appraising the neighborhood. Computers don’t take into account curb appeal. What is attractive to you, may not be attractive to another. Keep in mind that the District does keep an eye on the permits taken out on the property. Those CAN directly increase the value of the home.
  3. The best way to fight your appraisal is NOT to take in an equity argument—ie  my next door neighbor (I have not been in his house), has a little more sq feet, new roof, house looks great on the outside and his appraisal is $165K, so he is paying over $1,000 less in taxes a year. These types are of arguments are most successful in litigation and they are not as persuasive at the ARB level. You should focus on how the other homes are selling the area. Speak with a realtor to obtain comparable sales or hire a professional to represent you. You will need to make adjustments to the comparable sales based on land, size, pool, year built, class, etc. Also when appearing at the ARB hearing, be professional and respectful. The ARB is like a jury. You want them to like you.

Thanks! The Tax Doctor

A reader writes and the Tax Doc will respond! By the way, if you have NOT received your appraisal in the mail, that means your taxes are unchanged from last year. But you can still go down and try to lower your appraised values. In fact, the Tax Doctor advises it.

Hi Candy,

We are somewhat new homeowners living in Lake Highlands (75238) where the Dallas CAD has our property values all over the place.  Our home is not updated, except for one bathroom.  We are appraising on the CAD for $215K.  What is frustrating is that my next door neighbor (I have not been in his house), has a little more sq feet, new roof, and house looks great on the outside. His appraisal is $165K, so he is paying over $1,000 less in taxes a year.

My questions to you…

-Is it worth the time and effort to fight the appraisal?

-We did put a lot of sweat equity in our landscaping this past year, does that hurt us?  Are they actually driving by and making appraisals based on curb appeal?

-What is the best way to fight the appraisal?

I appreciate your insight, we are grateful to be homeowners but find it extremely discouraging when we see our neighbor’s homes with the $20K kitchen remodels, extra sq. footage, etc and know that we are paying more in taxes than they are.

Keep on blogging, you do great work!

Sincerely, Leeanne

The Dallas Morning News reports that thus far, the Dallas Central Appraisal District says property values overall are down about 3.5 percent this year…

“…not as bad a slide as last year and a possible sign that the market may be on the upswing, according to figures released Friday.”

Of course, as property owners come in and protest values, that percentage may decline even more. Which reminds me: I did not receive an appraisal in the mail, which means there has been no change in value on my home. The two appraisals I received on investment properties went up, which I am fighting. I have heard from many people that their values went up. So I wonder, whose went down?

The News also says County Budget Director Ryan Brown is anticipating a 4.5 percent overall drop countywide, which is not as much of a drop as last year BUT would still increase the county’s current $25 million budget shortfall by $4 million. So I guess all of us protesting are squeezing the budget.

The sunny side of this is, of course, a possible signal to stabilization of our market, at least in the Appraisal District’s eyes.

The Tax Doctor

Meet Tiffany Hamil Mackey. She is a Dallas attorney who wants to get tough on taxes — property taxes, that is. Tiffany is a graduate of Southern Methodist University and received her Juris Doctor degree, cum laude, from Texas Wesleyan School of Law. She attended the University of Florida, one of the top three tax programs in the nation, for her Master of Laws degree in Taxation. Yep, we’ve brought out the big guns here this year once again. Tiffany has helped thousands of property owners fight their appraisals and lower taxes and she is here for the next few critical weeks to take your questions.

By now, of course, you have received your appraisal. My guess is that few went up, few went down, most stayed the same. But look closely at what they did your values: did land go up while improvement went down? The deadline for protesting is June 1. Once again this year,  you can protest on line. When it comes to property taxes, foreclosures are your friend. Once again the chief appraiser may not exclude comparable homes that sold at foreclosure in any of the three years preceding the tax year. So that foreclosed home down the street may help lower your property value and this is one time when you embrace it.

State law also states that we can use homes sold within the last 24 months as comps, and the chief appraiser cannot exclude comparable homes that have declined in value because of the economy.

Also this year — we can arbitrate all residential homesteads and some real and personal property valued at $1 million or less and ALL residential homesteads.

That’s kind of complex, we’ll ask Tiffany to clarify.

So go get your appraisals, get yourself up off the floor, and write us here for The Tax Doctor: the Tax Doctor is IN.