Sales of vacation homes sink 37% in ’06
Monica Wilson loves her vacation home, an ocean-view condo within walking distance of the beach in Carlsbad, Calif.
She paid $620,000 for the place 13 months ago. But since then, the California vacation-home market has gone soft.
“If I sold my second home right now, it wouldn’t do very well,” the Pasadena-based real estate agent said.
Sales of second homes in California’s top vacation markets dropped 37% in 2006 from the year before, another consequence of the state’s overall housing slowdown, according to data released Thursday by real estate research firm DataQuick Information Systems.
By contrast, sales last year for all homes statewide fell 24.9% from a year earlier, La Jolla-based DataQuick said.
But despite the sales plunge, prices for second homes still rose last year, gaining 10.8% versus 2005 to a median of $400,000. The median price for all California homes rose 6.5% last year to $469,500, according to DataQuick.
Some analysts see the second-home price gains as a positive sign for the economy and overall housing market. If the economy was faltering, second-home owners -- who are typically more affluent -- would be selling at reduced prices.
That’s what happened in the early 1990s, when widespread job losses among middle-class workers caused vacation markets such as Big Bear and Palm Springs to tank first.
“If you were in trouble, you would sell your second home first,” said John Karevoll, DataQuick’s chief analyst. “If there is trouble on the horizon, it hasn’t hit yet.”
But now that overall home prices have stopped their double-digit gains, Californians seeking a cozy ski cabin or desert getaway are being more strategic about where to spend their real estate nest eggs.
“As prices leveled off last year, interest in weekend retreats declined,” DataQuick President Marshall Prentice said.
The drop in second-home sales was about the same in three major vacation markets. Sales in the Greater Palm Springs area fell 38.4%; the Lake Arrowhead-Big Bear area tailed off 37.3%; and the Sierra and foothill communities tumbled 34.7%, DataQuick found.
Even such places as Earp, Calif., a budding second-home market for Colorado River enthusiasts where a 2,000-square-foot house can be had for $159,000, saw a 27% drop in sales -- from 11 homes in 2005 to eight last year.
Second-home sales in California peaked in 2004, when 24,916 transactions were made. That also happened to be the peak year for all home sales in the state. Vacation-market sales started to slow in 2005.
Even popular, out-of-state markets are getting less interest from Californians. In 2006, Phoenix home sales to Californians fell 50%, and Las Vegas sales dropped 32%, DataQuick said.
But some market players are optimistic.
Big Bear-based real estate broker Greg Pilcher believes that his market is starting to turn a corner. In the last 30 days, he has brokered six deals, which is above average for this time of year. That could put him on track to match his 2005 record of 100 sales.
“Today’s customer is the kind of family that comes up here and stays in a rental year after year and now realizes they have to buy,” he said. That’s because prices continue to rise. The median in Southern California mountain communities rose 7% last year from 2005.
Nonetheless, vacation homes are taking longer to sell. In Big Bear, days on the market average about 200, far longer than the 35 to 40 days it took to sell a home in 2004, Pilcher said.
Derrick Rushton hopes that he doesn’t have to wait that long to sell his three-bedroom, log-sided cabin in Sugarloaf, a ski resort near Big Bear Lake.
But there’s an upside to not selling his vacation home immediately. He can still use it.
“It’s snowing there now,” said the retired commercial diver, who resides in Ventura. “I’m going to be up there this weekend.”
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Softening market
2006 median price for second homes in California
(In thousands)
So. Calif. beach areas: $1,350
Coast: 745
Bay Area: 665
Sierra: 415
Desert: 395
So. Calif. mountain areas : 305
Central Valley: 303
North of Bay Area and Sacramento: 295
