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Sales of California vacation homes see some decline

Monday, March 5, 2007

Sales of second-homes in California cooled last year, the result of lower appreciation for primary residences as well as continued interest in out of state properties, a real estate information service reported.

A total of 13,798 second homes were purchased in vacation markets in California in 2006, down 37.1 percent from 21,925 in 2005, and the lowest number of sales in DataQuick's second-home statistics, which go back to 1998. The peak was in 2004 when 24,916 vacation homes sold.

The dip in sales of second-homes mirrors the decline in sales as the market continues to transition. Sales of all homes statewide declined 24.9 percent last year, from 742,715 in 2005 to 557,782 in 2006.

San Mateo County Association of Realtors® (SAMCAR) President Geoffrey Craighead said while the economy - especially in San Mateo County - appears in full swing and interest rates low, vacation homes are usually not eyed as an extra purchase as the market continues its transition.
“When the economy goes bad, vacation homes are usually the first to go, but the economy is good here and sales are starting to pick up in local housing markets like San Mateo County,” said Craighead. He explained the decline in interest in vacation homes merely reflects a reaction to the market’s transition.

According to DataQuick President Marshall Prentice, “Many California homeowners were feeling pretty good in 2004 and 2005 when there was double-digit appreciation. It appears a lot of them felt that using built-up equity to buy a mountain cabin or a condo in the desert would be a good investment. As prices leveled off last year, interest in weekend retreats declined.”

The drop in second home sales was roughly the same in the three major markets: sales were off 38.4 percent in the greater Palm Springs area, 34.7 percent in Sierra mountain and foothill communities, and off 37.3 percent in the Lake Arrowhead/Big Bear area. Because most second-home communities are also primary-home communities, sales overall in these areas dropped at a more moderate pace, according to the report.

Some communities stand out because virtually all home buying was for second homes. These include Tahoe Vista, Carnelian Bay, Kirkwood and Olympic Valley in the Tahoe area, as well as Fawnskin and Sugarloaf in the Big Bear area.

Prices of second homes, however, continue their appreciation. The median price paid for a second home in California was $400,000 last year, up 10.8 percent from $361,000 the year before, but below the statewide median of $469,500 for all homes.

Last year Las Vegas saw a drop in second homes purchased by Californians. In 2006, Californians bought 8,409 homes in the Las Vegas area, down 32.4 percent from 2005. In 2001, there were 1,824 Las Vegas area purchases by Californians. The Las Vegas numbers include all purchases by California residents, including second homes, investment properties and primary residences where the property tax bill is sent to a California address.

DataQuick’s report indicated other areas favored by Californians for second homes included the Arizona communities of Phoenix, Lake Havasu, Tucson, Mesa, Scottsdale, Bullhead City, and Reno, Nev. and Incline Village by Lake Tahoe.
In the spring of 2006, second homes accounted for 40 percent of the housing market.

The San Mateo County Association of REALTORS® (SAMCAR) is a professional trade organization representing over 3,800 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula. SAMCAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in San Mateo County.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Julie Ziemelis, Director of Public Affairs, e-mail , or phone (650) 696-8214.

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