One is not enough
More Americans are sticking close to home these days, choosing nearby vacation rentals for holidays and getaways, and likewise, a growing number are buying second homes for enjoyment and as rental investments.
The vacation- and second-home market is, in fact, appreciating faster than the already record-breaking Southern California real estate market, according to John Karevoll, an analyst at DataQuick Information Systems. And it is poised for an even bigger surge.
"This is discretionary buying," Karevoll said. "It fluctuates more than primary-home buying does. When the market goes up as a whole, the vacation- and secondary-home market goes up faster. When the overall market goes down, it goes down faster."
The increases in second-home purchases and vacationers choosing to forgo the expensive European or tropical island trip for a holiday closer to home are attributed to continuing concerns about safety and terrorism, according to David Lereah, chief economist for the National Assn. of Realtors in Washington, D.C. "Since 9/11, it's about security," Lereah said. "People don't want to stray too far from home."
This nesting mentality, and double-digit appreciation in local real estate while the stock market sags, is fueling the second-home market, experts say.
Although the Realtors' association has yet to complete tabulations of 2003 second-home sales, a record of about 445,000 sales nationwide is expected. Currently, there are about 7 million vacation homes in the U.S. and about 500,000 non-owner-occupied homes in Southern California. The mountain resorts of Big Bear, Lake Arrowhead and Running Springs and the desert communities of Palm Springs, Rancho Mirage and Palm Desert make up 90% of the Southern California market for vacation and rental homes.
Many local areas popular for vacation rentals are enjoying tremendous appreciation in prices, according to sales tracked by DataQuick. Among those at the high end of appreciation in February were Laguna Beach, up 31.3% from the same month a year earlier; the southern area of Palm Springs, up 51.6%; and the mountain community of Crestline, up 53.6%.
Median prices for second homes sold during the first quarter of 2004 were $238,000 in the greater Palm Springs area and $194,000 in the mountain communities.
Karyn Benjamin, 49, and her husband, William, 53, recently purchased a $195,000 two-bedroom cabin in Lake Arrowhead after being advised in a real estate investment class that the mountain market was hot.
