Vacation Home Sales Sliding
Usually at this time of year, when the desert sun merely sizzles instead of scorches, people flock to buy vacation homes in the resorts of the Coachella Valley. But so far, the prime season for home buying in this area seems as arid as the breeze there.
In Palm Springs, Palm Desert, Rancho Mirage and other cities across the valley, vacation home sales plunged 20% last year, even though sales of all homes in Southern California held steady. And this winter has been particularly slow for higher-end homes in the Coachella Valley--California’s biggest vacation-home market.
“There’s no urgency in the market,” said Bruce Blomgren, an agent at Dyson & Dyson Real Estate who specializes in luxury properties in Indian Wells, east of Palm Springs. “Buyers may look, but it’s hard to get them excited about making a purchase.”
Such doldrums are shared in vacation-home resorts across the country, which have not been as resilient during the downturn as the housing market overall.
Sales of second homes in California fell 15% last year, according to DataQuick Information Systems Inc. Comparable figures for the U.S. aren’t available, but brokers from a number of resort areas say sales have softened.
In the mountains of Park City, Utah, broker Dennis Hanlon estimated that vacation home sales declined 5% to 8% in 2001 compared with the previous year. Hanlon is president of the Rocky Mountain Resort Alliance, which represents Realtors in five states and British Columbia. He said sales have picked up a bit lately as the economy has shown signs of improvement.
But in places like northeast Connecticut, there are few indications of an immediate rebound. Stephen Drezen, a broker at Landmark Real Estate in Goshen, said sales so far have fallen about 20% from a year earlier, which he attributed to the lingering effects of the Sept. 11 terrorist attacks and the war in Afghanistan.
“A property that a year ago took a few weeks to sell is now taking a few months,” said Christian Duhaime, manager of Remax Consultants Realty in Fort Lauderdale, Fla. He expects the appreciation rate of second homes in his area to slow this year to between 4% and 5% from double-digit growth in each of the last two years.
Such talk is a striking contrast to the breathless pace during the late ‘90s, when demand for second homes soared along with rising incomes, an aging population and favorable tax laws. Many of those factors have led industry watchers such as Clark Thompson, chief executive of online vacation home seller EscapeHomes.com, to say sales of second homes should keep growing at a good clip over the next decade.
But with the economic uncertainties and the sluggish stock market weighing on people’s financial portfolios, many consumers remain reluctant to splurge on a second or third dwelling. Also, fewer out-of-town visitors have been flying into resort areas since Sept. 11. Although tourists account for a small share of purchases, their absence nonetheless has been keenly felt by home sellers and real estate brokers.
DataQuick, which compiled the second-home figures for The Times by analyzing transaction records, said some vacation-home areas in the state still are flourishing. Sales in the San Bernardino mountain resorts of Lake Arrowhead and Big Bear, for example, jumped 15% last year to record levels. DataQuick analyst John Karevoll attributed that to Southern Californians wanting to take advantage of the generally robust pace of home appreciation in the region.
But the picture is vastly different in more expensive second-home markets. Second-home sales in the Sierras were off 36% last year. And in Coachella Valley, vacation-home sales dropped to 4,136 last year, down 19% from 5,127 in 2000.
As sales have waned, the inventory of unsold homes in the valley has surged, boosted also by new construction.
“The [buyer] traffic is there, the interest rates are right, it’s just a matter of people saying, ‘Do we want to do this or not?’” said Ron Hanna, an agent at Fred Sands Desert Realty in Palm Desert. Hanna and some other agents said the market for moderately priced second homes is beginning to pick up.
But the lack of high-end buyers has led some real estate agents to decline offers to represent homes worth $1 million or more. Though prices of vacation homes in the Coachella Valley haven’t fallen, they haven’t kept pace with the double-digit percentage gains in much of Southern California.
Blomgren, who represents 50 sellers with homes priced at $600,000 or more in the desert valley, said the unusually cooler weather this winter has made it even harder to convince snowbirds from the Midwest, as well as current residents in the area, to buy expensive homes.
“People don’t get as revved up about it when they’re drinking hot chocolate or coffee to keep warm instead of playing golf in shorts,” he said.
These days, even the allure of living in a resort where Hollywood stars could be neighbors isn’t enough.
Tom Langan has been trying to sell his 6,000-square-foot home, with four master suites and marble baths, a waterfall pool and a home theater room. This month, he lowered the price on the Rancho Mirage home again, to $1.79 million, from the original listing of $2.5million. But the former executive producer and head writer of the soap opera “Days of Our Lives” said he feels stiff competition for buyers’ attention.
“People look at the home and say it’s beautiful,” he said. “But no one’s bought it.”
