The summer of 2009 is shaping up to be an historical window of opportunity for buying fun and affordable vacation homes. Mortgage money is flowing again, interest rates on safe and secure fixed rate loans are extremely attractive, and the inventory of deeply discounted condos and houses in popular vacation destinations is ripe for the picking.
According to a recent article in the National Association of Realtors (NAR) publication Realtor Magazine, prices have dropped up to 50 percent in some of America’s top vacation home markets. But that does not mean that sales are in the doldrums. Buyers are starting to step in and make offers to purchase before the deals disappear and while mortgage rates still hover near historically low levels. Sales of beach homes in Daytona Beach, for instance, are up about 20 percent compared to this time last year, and that is based on statistics recorded before the peak of the summer selling season. In the month of March, for instance, sales of Daytona Beach condos were twice as brisk as they were in the previous month, and homes in the $200,000 to $400,000 range were moving the fastest.
Foreign nationals have also recognized the value of properties throughout the nation, especially in world-famous hotspots like Miami and South Beach. Buyers from other countries are responsible for about 10 percent of recent real estate purchases. That kind of eager buyer participation is giving the market for vacation homes added traction, and many economists expect that the lowest prices are already slipping away as real estate regains its footing.
A recently published NAR vacation home survey found that 27 percent of vacation home buyers considered the purchase a way to diversify their investments. Many bought in order to enjoy extra income ownership of a rental property that they can later convert into a retirement home.
But prized properties in the most desirable destinations are still up for grabs. Fortune Magazine recently included San Diego, Miami, and Washington, DC, for example, in its list of cities offering the best discounts for 2009. Vacation homes in Marco Island, FL had fallen about 27 percent by the end of 2008 compared to the previous year, and during the same timeframe Napa, CA vacation homes became more than 20 percent cheaper. Other places where holiday bargains can be found this summer include Mystic, CT; Point Pleasant Beach, NJ; and Sunriver, OR.
Traditionally high-priced Palm Beach, FL real estate is also significantly undervalued, having pulled back drastically from peak levels when the artificial speculation-fueled real estate bubble pushed prices far above realistic valuations. According to one investment consulting group, houses in Palm Beach were overpriced by more than 40 percent in 2006, whereas they are currently undervalued by about 30 percent. Meanwhile in nearby Delray Beach some beachfront condos are selling for as little as $100,000. Just a few years ago it was virtually impossible to touch those kinds of Florida ocean view prop