Second Homes and Tough Markets

Date: Jan. 11th, 2009
Contact: Tom Harris Phone: 000.000.0000 Ext. 0000

The reality of our economic situation has finally caught up to the second home market.  So does that mean you shouldn’t consider a second home in 2009? If you have a second home in the mountains, and want to sell it, is now the time?

Everyone is acutely aware of the challenges looming in the primary home market. However, second homes do not mirror the total real estate market. “While the overall housing market peaked in 2005, the market for vacation homes didn’t peak until 2006,” says Walter Molony, a spokesman for the National Association of Realtors in Washington.

This means there is a good chance the recovery in the second-home markets will not lag behind the larger housing market. And the reason for this is because of the large number of transactions that are not subject to financing. This means a quicker rebound could occur if buyers’ confidence improves, even if credit is still tight.

There are several reasons this year could be a good time to consider buying your second home. For example:

  • The number of transactions in many Colorado resorts has dropped dramatically but average prices are holding steady. And in some areas and at certain price points, average prices have even gone up.
  • Inventory in many of Colorado’s resort towns has increased significantly, giving buyers many more choices.
  • Interest rates are at favorable levels.
  • The Federal Housing Administration recently (January 1, 2009) took back some of its increased loan limits in expensive areas, but they are still pretty high at $625,500.

If you are thinking of selling your second home, it may be in your best interest to wait. You need to understand that you will not get out unscathed if you bought just a couple of years ago. Maybe you should consider renting your second home. If you bought five or more years ago, you will probably see a profit.

With many resort towns reporting huge increases in inventory, many buyers “sitting on the fence,” and everybody staring at their cloudy crystal balls, it could be a good time for you to consider buying. Ask yourself these questions:

Am I optimistic about the future?

  • Do we have sufficient cash?
  • Do we really want a second home for family vacations and possibly retirement?
  • Would a second home help us diversify our investments?

If you can answer “yes” to these questions, you will probably thank yourself in the future for getting your mountain retreat in 2009.