Rustic Retreat XL as seen on HGTV’s Tiny House, Big Living – Photo Courtesy Backcountry Containers
In just 18 short months, Houston-based Backcountry Containers has taken tiny-house-living by storm, transforming their entire business model from creating affordable tiny homes that can be shipped anywhere in the country, to operating as a fully-fledged, custom home builder – of tiny homes, that is.
For a pretty penny, you, too could vacation in eco-friendly style in Boulder, Colo.
Got a hankering for a summer home and not a lot of cash? ATTOM Data Solutions’ newest report is a one-stop guide to the best places to buy a summer vacation home without breaking the bank.
The report analyzes the nation’s 100 most popular vacation home cities — where, according to ATTOM, at least one in every 12 buyers is looking for a second home — to find those with the best combination of good air quality, comfortable summertime temperatures, low crime, and appreciating home values — along with still-reasonable home prices.
Stick around for a look at all 100 vacation cities, or just follow after the jump for a top twenty cheat sheet.
A visit to Bill and Hillary’s starter home in Fayetteville, Ark., prompted Bethany Erickson to take a look at what the real estate market in the area looks like — and it’s a boon for second home hunters.
Love mountains, but also love shopping? Love Austin, but hate the traffic?
Haaaaaaaave you met Fayetteville, Ark.?
Now, I must confess a great deal of bias — Fayetteville is my old stomping grounds, and whenever we get a chance, we head there for R&R. In fact, we were there over Christmas vacation, and had the chance to tour a very well-known starter home — Bill and Hillary Clinton’s first home — where they lived while both taught at University of Arkansas’ law school.
While flipping the filets yesterday, while it was pouring rain, I was aghast that I had left you with the impression that only a gadzillionaire could afford a vacation home at The Greenbrier. In fact, the Greenbrier Sporting Club is one of the best values in vacation home properties. I showed you a $5 million house, how about one for UNDER a million?
View from Waikiki towards Diamond Head and the Gold Coast
It’s 34 degrees, windy and icy in Dallas with snow on the way.
It’s 83 and sunny in Hawaii.
Enough said, right?
For a few years after graduating college, I spent Christmas and New Year’s in London – to escape, versus be with, family. While I continue to love London, it only took a few years for this college-educated Chicago boy to realize Hawaii was warm, which in December is a scarce commodity in Chicago.
It took three visits before I unlocked the secret to enjoying Hawaii. I hated Waikiki and its flocks of bargain-hunting Japanese tourists. I hated the outer islands with their pretentious American tourists and unendingly sedate lifestyle. On my third visit I met a guy in a bar…(shush!)
After sharing my woes on Hawaii, he suggested meeting for lunch the next day to see where he was staying. Turns out he was staying at the Diamond Head Beach Hotel which is one of a group of high-rises at the foot of Diamond Head called the Gold Coast (that photographers love to crop out of pictures). They’re oceanfront and separated from Waikiki by the rather large Kapiolani Park which serves as a DMZ that tourists rarely cross. (Tip: if you saw the movie The Descendants, there really is a Gold Coast Real Estate – No idea what that placement cost!)
I was hooked. Here was the peace and quiet I was looking for by day, but just a beautiful 10 minute walk along the ocean from the shops, nightlife and restaurants of Waikiki. And his room had a kitchen, eliminating the non-stop trolling for every single nosh and tipple.
The next year I rented a condo a couple of buildings down for three weeks, and a few years later in 2000 purchased one for myself – my personal Y2K event. After my first rental, my new friend rented one for himself the following year. He and his partner purchased their own unit in 2009. Small world.
The Gold Coast
The Gold Coast
The Gold Coast includes 16 oceanfront mid/high-rises, one off-ocean high-rise (where Hawaii 5-O’s original Danno lived until his death in 2010) and three small hotels with a total of just 236 rooms. All were built in the late 1950s (pre-statehood) up until the late 1960s when construction stopped for fear of ruining the view of Diamond Head.
The area’s buildings are perfectly sandwiched between the ocean and 108-acre Kapiolani Park. When you hear about newer buildings in Waikiki like Trump or the Ritz Residences, remember even at their much higher prices, they’re not oceanfront and they’re not peaceful.
Each building has its own slightly different vibe and history…and of course stories and lore abound. Tennessee Ernie Ford, Lana Turner and Grace Park from the current Hawaii 5-O have lived in the Colony Surf. Magnum P.I. regular Larry Manetti lived at Colony Beach during filming. Dance-school namesakes Arthur and Kathryn Murray took up residence at Sans Souci. Even my humble home was once occupied by a woman who appeared in Vaudeville with the Gum Sisters (one of whom was Judy Garland).
The smallest building is the one-per-floor Colony Beach with just 8 units located right next door to the largest, Colony Surf at 172 units – two of a trio built by John Barkhorn. Several buildings have just one or two units per floor, resulting in generally larger, always more costly units. I know of one penthouse offering 360-degree views with just over 5,000 square feet.
Two of the condo buildings, The Colony Surf and Sans Souci allow owners to rent their units for a minimum of one month. They’re also two of the buildings that have their own sandy beach (most have a seawall). Depending on time of year, unit size, location and condition, rentals range from $2,000-5,000 per month (a fraction of an oceanfront hotel room and with a kitchen). The remaining buildings either don’t allow rentals or require a full year lease.
Purchasing in the area enters nose-bleed territory with fee-simple, decent-view units fetching upwards of $1,200-$1,400 per square foot. In the past 12-months, sold units ranged from $784 to $2,800 per square foot and are on an upswing. Units tend to be smaller with some as little as 350 square feet with the largest non-combined/non-penthouse units topping out around 2,000 square feet.
View from the Gold Coast towards Waikiki
Leasehold, Co-Op and Condotel
Three words not familiar to most Texans are leasehold, co-op and condotel. If you’re seeking to purchase a property with any of these designations and you require a mortgage, understand that they will increase your rate and may toughen requirements or disqualify you for financing.
Leasehold means the building doesn’t own the land under the building. The building has a lease for a set period that calls for regular rent payments. At the end of the lease, it may or may not be renewed by the land owner. The land may also be sold to the unit owners for a fee. Buying leasehold property can be risky. If the landowner decides not to renew the lease, the building (and your unit) is surrendered to the landowner for no compensation. Even if the lease is renewed, the new rental fees will almost certainly be exponentially higher (a lot changes in the decades a lease is in force). In your best Dirty Harry, “Do I feel lucky?” Well, do ya punk?
Leaseholds were originally encouraged from the 1950s to the 1970s to boost housing stocks during a post-war shortage. Leasing kept land in the family but generated income and had a certain patriotic flair. But when leases expired or were renewed, homeowners faced big changes in their payments. While many single-family properties converted to fee simple, condos (more valuable) didn’t. In 1991, Section 38 was passed to allow condominium meeting certain requirements to force the City of Honolulu to condemn the property, purchase it and flip it to the condo owners. Many condo buildings converted (voluntarily and forced), but by 2005 the political winds had changed and the law was repealed leaving many buildings with quickly expiring leases.
There is one oceanfront building in Kahala (the Highland Park of Honolulu) where condo prices, once $1+ million, now equate to the rental income from the remainder of the lease because the owner, a charitable trust, has made no secret of the lease not being renewed.
On the Gold Coast, the Sans Souci building’s lease, expiring in 2024, has a cloud over it as remaining landowners decide what to do. This has caused price erosion with banks refusing to lend on a building once one of the most expensive in the area. Whipsawing in prices can be seen in the two oceanfront units sold in December 2014, one for $382 per square foot while the other fetched $746 – compare that to fee simple neighbors selling for over $1,200 per square foot. Of course if the building is able to buy the land, the payment will be formidable – hundreds of thousands per unit. One thing working in Sans Souci’s favor is that unlike the Kahala building, Sans Souci is owned by a dwindling family, not a charity seeking to monetize its investment.
Co-ops are corporations that own the building. Homeowners own a share in the corporation that equates to their unit. Banks view this type of ownership as being more risky than a condo, but personally I think banks see risk everywhere to increase their profits.
For reference, my unit was in a leasehold co-op building. Since I purchased, it has converted to fee simple condo ownership. The leasehold situation didn’t deter me because the building sat on four parcels of land belonging to different owners. By 2000, three of the four had already been purchased and the remaining scrap of land was in the middle of the attached parking garage. There was no useful purpose to the landlocked parcel except as part of our building and if the worst happened, there was a hole in the parking garage but the residential tower (and my investment) would be intact.
A “condotel” is a former hotel that’s sold off its rooms individually but still retains hotel operations. Owners can place their units into the hotel “pool” for rental by the day with a pre-arranged revenue split. Not to be confused with a timeshare where one unit’s ownership is spread across multiple owners. Condotel owners own 100% of their unit and can live in it all year if they like. The hotel aspect is meant to give owners a way to generate revenue.
On the Gold Coast, the leasehold Diamond Head beach Hotel is a condotel whose lease expires in 2032. This building was never a successful conversion to condos. Its A-frame shape means the most desirable top floor units are the smallest. Few kitchens and daily rentals only add to the transient vibe. These issues make it the cheapest building in the area with unit sales in the $300 per square foot range (1/3 of assessed values; values are assessed on fee simple ownership even if its leasehold) and where “days on market” should be changed to “years on market.” Like Sans Souci, the closer to the end of the lease, the more the price drops. Prices today are mostly unchanged from a decade ago. Compare that with neighboring fee simple buildings that saw values double or triple over the decade.
Sunset on a Gold Coast beach
Hawaii Real Estate
If you have the time, Hawaii real estate is a hard place to lose money. For many decades, prices have followed a 10-ish year cycle of peak, crash, followed by an even higher peak. In decades past, real estate crashes have been blamed on the Japanese, Canadians, Dot-com bust and most recently, the global recession. During the recession, prices dropped around 25% after doubling or tripling in the previous decade’s upswing. Since the rebound, prices have reached another all-time high. In 15 years, my investment has almost quintupled. Of course like anything, if you buy high and are forced to sell during a trough, you’re going to lose. But long-term, it’s hard to beat.
Be aware there is a large disconnect between purchase prices and rental income. If you’re looking to buy and rent a home, the rental income will help, but you’re it’s in no way going to pay the mortgage, taxes and HOA fees.
However property taxes are a bright spot. Honolulu’s are among the lowest in the nation. I pay half as much for a property valued at triple my Dallas home.
Thinking about Hawaii for more than a week’s vacation? Here are some resources:
Captain Cook Resorts: Local firm that specializes in property rentals in the Gold Coast and Waikiki area. They have tons of properties under management and local folks who can answer any questions. Very professional outfit. http://www.captaincookresorts.com/
These days we tend to think of second homes as being located as a plane flight or at least a several-hour car ride from the primary residence, but it wasn’t always this way. In the days before cars, a smaller distance might provide all the respite necessary.
Photo: E.J. Murphy Realty
Case in point: Weather Watch Farm, a country estate in Litchfield, Connecticut. The 28-acre estate offers rolling green vistas and tranquil meadows just as it has for centuries. The estate includes a colonial farmhouse that dates back to the 1800s and was once home to the Howe family among other residents. Ernest Howe (1872-1915), was a Yale-educated geologist who spent his winters in New Haven but his summers at the farm.
Jane Stieren and Bill Lacy commissioned a book on their Hill Country ranch.
It’s true that buying a piece of land is like a long-term relationship. The buildings on it may change, as well as the owners, and after many years you are left with something beautiful but different. Haven’t you ever wanted to capture the history and essence of a home or ranch at one point in time? Now you can.
Sure, there are many monographs that make for good coffee table books, but the books that John Bigelow Taylor, a photographer, and his wife, Diane Dubler, create are a category in their own.
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.