It’s Back to Reality for Over-Heated Vacation Homes Market
As vacation-home markets cool, would-be buyers should take a sober look at the economics of ownership
This is the conclusion of June Fletcher, writing in Monday’s edition of the Wall Street Journal. She says that in her market of choice, Naples Florida, there are clear signs that the market is changing, “Inventory levels now are four times as high as they were a year ago, local real-estate agents say, largely because nervous investors are trying to cash out their gains before rising mortgage interest rates topple the market.�
The article also has a striking chart that points out the amount of over-valuation of properties in several resort areas. They range from a high of 96.3 % in Naples to a low of 35.3 % in Honolulu. Ms. Fletcher counsels that vacation-home buyers should take heed: “The days when you could flip a beach house or ski place for fun and profit are probably over. That doesn't mean that you should avoid a second home altogether, but it's time to take a serious look at the economic factors that propel vacation markets, and to weigh the financial costs of ownership.�
One of the most interesting items in the article is a quote from the National Association of Realtors that 8 out 10 vacation home owners choose not to rent their properties out. We at VRO believe that is bound to change as over-heated markets cool and as more and more owners turn to renting out their vacation properties to reduce their carrying costs.
