Vacation, investment homes make up a third of sales

Spring has brought a pickup in the vacation home market.

NEW YORK (AP) — Sales of investment and vacation homes plunged last year along with the rest of the housing market, but still made up one out of every three homes sold, the National Association of Realtors reported Friday.

As easy credit dried up and speculators continued to vanish, investment home sales dropped 18 percent from 2006 levels. However, bargain hunters, such as Daniel and Nancy Isom, helped cushion the fall as investors snapped up about one out of every five homes sold last year.

“We saw there were a lot of foreclosures and a lot of opportunities,” said Daniel, 53, a resident of Lake Havasu City, Ariz. “We started looking for an old house and think we picked up a good deal.”

The Isoms bought a home in the area for $125,000 from a bank that had foreclosed on the previous owner. The couple plans to finish renovating the 1980s stucco home by next week and rent it out until the market turns around.

Vacation homes, meanwhile, suffered a larger decline of almost 31 percent from 2006 to 740,000 homes. The majority of buyers purchased single-family homes in the warmer, southern states, the study found.

And resort destinations attracted one out of five vacation-home buyers.

In the ski areas of Aspen and Vail, Colo., for example, sales volume has leveled off, but there has been no drop-off in prices, said Dennis Johnson, a real estate broker at Paffrath Thomas in nearby Breckenridge.

“We’re still going strong,” he said.

In Manhattan Beach, Calif., Steve Goddard, an agent at RE/Max Beach Cities Realty, noticed only a dip in vacation home sales and prices last year, but already is seeing a spring pickup in the market, which lures buyers from all over Los Angeles.

“Just recently, there were multiple offers on two properties and both ended up going for more than the listing price,” he said.

But nationally, the median price of a vacation home slid 2.5 percent to $195,000 last year, while the median price of an investment property was flat at $150,000.

And since the market for investment and vacation homes tends to follow broader housing trends, falling home prices in many cities this year may scare off some prospective buyers.

“One of the tools people used for their down payment was using equity from their primary homes. But now with dwindling prices, they can’t do that as much,” said Greg Fujita, a real estate agent at Harbor Bay Realty in Alameda, Calif., east of San Francisco.

The only segment of vacation home buyers that has grown, Fujita said, are international buyers who are taking advantage of a weaker dollar. Foreign buyers aren’t included in the NAR survey.

Otherwise, Fujita expects more of the same this year with prices dropping further.

“The motivational factor is not as strong even if a buyer has the equity,” he said. “It’s difficult to pull the trigger if they feel that values are coming down.”