As yet another “Snowbird Season” draws to a close, newbies are no doubt planning the next trip to Florida. Many are looking for the perfect place to winter over from all points north and cold. I’ve lived in coastal areas for several years, and have witnessed the Snowbird Season up close and personal. There is such a thing as a snowbird starter home. And, there’s one particular place many of them will choose a second, and eventual retirement home — The Villages. As active senior developments have grown in popularity, The Villages is unique and absolutely fascinating.
543,000 vacation homes were sold in 2010, ten less than in 2009.
867,000 investment homes were sold in 2010
940,000 investment homes were sold in 2009
Only 25 percent of vacation home buyers plan to rent them.
Only 20 percent of investment buyers plan to use their second homes themselves.
The median price of a vacation homes hovers between $150,000 and $170,000 and is falling.
The median price of an investment property is usually around $105,000.
Vacation homes accounted for 10% of all real estate sales last year.
Investment homes accounted for 17% of all real estate sales last year.
Baby Boomers closing out their “peak financial years” are shopping for second homes and swooping up the bargains, but the second home market is still tepid. The benefits: a long-term investment and hedge against inflation if they are buying at the bottom, and income potential through rental. If Boomers are looking toward retirement or a scaling back of work, many see a future retirement home in the second home. That is, they want to lock down a place now while prices are low in anticipation of selling the larger family home eventually.
Why is this so different from the way Boomer’s parents operated? Most Boomers bought their home, paid it off, and stayed in it until they moved (or were moved) to a retirement home. My uncle lived in his home until he died at the age of 100. But dynamics that made this scenario attractive have changed. Property taxes, for one, are rising in urban areas, as is crime and traffic. Federal tax laws have changed and may change again, making home ownership more (or less) attractive. As income dips, real estate investment can provide additional tax benefits or shelter. Children are spread across the globe and may not be able to take care of an elderly parent in the family home. Boomers lived in homes that average less than 2,000 square feet. Their children (baby boomers) bought and built bigger homes that eventually become costly or cumbersome to maintain.
Demographically, the typical vacation-home buyer is about 46 years old, has a median household income of $87,500, and purchases a property that is a median distance of 348 miles from their primary residence, according to the National Association of Realtors. (About 34 percent were within 100 miles of their primary residence, and 40 percent were more than 500 miles away.)
Annually, between 10-27 percent of all homes sold in the United States are in the vacation homes, second home or investment home category. And those numbers will increase because vacation homes are a bargain right now. The median price of a vacation or second home was $150,000 in 2010, down a whopping 11.2% from a year earlier, according to the NAR. Nationally, values at primary residences fell 4.5% in 2010. Nearly 40% of vacation home sales were cash sales, and if a buyer did obtain financing, they put a bunch down, 30 to 40% down. Finally, most vacation home buyers wanted the great deals and found them: nearly 17% of the investment homes they bought were foreclosures.
Those percentages were little changed for 2010 as home sales declined across the board. There were 543,000 vacation homes sold, down from 553,000 in 2009; investment purchases fell to 867,000 from 940,000.
One factor depressing sales was the difficulty in getting mortgages due to tight credit markets. Buyers often did an end-around this problem by paying cash. Nearly 40% of vacation home sales were cash deals, while nearly 60% of investment deals were handled that way.
Because he wants to be closer to his mother, which is so wonderfully sweet. My Austin sources tell me that Dennis and Kimberly’s new home is on Matthews Drive in Tarrytown right on Lake Austin, on one of the most gorgeous streets in town and most convenient to UT. (Dallas readers, it’s the Dallas equivalent of living on Lakeside Drive in Highland Park, but more eclectic.) Before she met Dennis, Kimberly was head of
marketing for Texas American Title Company. The Quaids owned a house in Austin which they sold in late 2009 on the Westlake side of Lake Austin, across the way from this treasure. Word is Dennis spent very little time there.
But now, Dennis’s mother has just moved into a retirement home in Austin near the Arboretum on Great Hills Drive, and he wants to be closer to her and let her enjoy the twins. Did I tell you the $12,000,000 home they just bought also has an FAA-approved heli-pad? Now, how much would that have set you back in LA? Austin realtors tell me to get ready for more moving vans carting off Hollywood celebs: they really like what they can buy in Austin.
I ran and snapped a quick pic of the Phillips house tonight — not too icy — but I will try to get a better one when the weather clears. Beautiful multi-color stone home, built by Ryan Osborne. And as usual, I stand corrected. (If I had a dollar…) The Phillips bought the home from Osborne so they are the first family to live in the house. It has a kind of U-shape, the garage on the left, and that structure on the right is actually a guest house. No kidding. When they bought the house, they had the builder put the guest house out front at their request, and despite a few objections from the neighborhood. (Neighborhoods!) Why did they want the guest house here? It was where Phillips mother-in-law was going to live. (What a great son-in-law to go to all that trouble.) Anyhow, she ended up not liking it after all, and moved to a nearby retirement home instead. But you know what, I think it makes guests feel extra special to have the guest house in the front, not back, of the property.