ORLANDO, Fla. – July 10, 2012 – The vacation-home market, hit particularly hard by walk-away owners during the real-estate downturn, appears to be making a comeback, with sales growth in recent years exceeding that of primary residences.
Central Florida’s second-home market has been thriving, thanks to a seemingly irresistible combination of record-low prices and record-high numbers of tourists. The Orlando metropolitan area was recently listed, for instance, as one of the country’s “10 hot spots for foreign buyers” by Inman News, an online real-estate news service.
Second-home sales nationally through last year have grown 15 percent since 2008, while sales of regular homes have fallen 13 percent during that time, according to a recent report by the National Association of Realtors. Local agents say that national trend also holds true for the Orlando area, largely because of the area’s cheap real-estate prices and an increasing supply of prospective buyers in the form of vacationers and other visitors, particularly Canadians and South Americans.
“Six months ago through the Easter rush, buyers wanted something for under $150,000, and you could find 40 to 60 listings,” said Joe Rogers, property manager for Florida Scandinavian Vacation Homes and Management in Kissimmee. “Now it’s more like five to 10 listings. The market is evaporating, and the inventory is being sucked up in a vacuum.”
Even though such vacation-home sales aren’t tracked locally, Rogers estimated that prices for those properties have increased as much as 20 percent in the past six months. Financing for second-home mortgages, nonexistent just a few years ago, is now available with downpayments of 30 percent, he noted.
Despite the reported price increases of recent months, area properties are still so deeply discounted from the 2007-08 housing bubble that buyers can still find deals.
In Osceola County’s Reunion Resort community, which allows short-term rentals, vacation-home broker Scott James recently secured a $535,000 contract on a home that had been valued at $1.5 million at the market’s peak. Many of these sales, he said, are in the Davenport area of Polk and Osceola.
“A lot more investors are circling those areas and buying up a lot of the properties, especially the foreclosures,” said James, owner of Luxury Lifestyle Vacation Homes, which is based in Davenport.
The area’s resort-home market was troubled during the bubble by unscrupulous property-management companies that pocketed rental income without maintaining the properties. But many of those overseas operations went out of business during the real-estate downturn, according to James.
On a national level, the vacation-rental website HomeAway Inc. recently estimated that 39 percent of vacation-home buyers in the U.S. have purchased distressed properties. Resort-home owners had abandoned their properties at higher rates than regular homeowners had in recent years, pushing a larger share of vacation houses into foreclosure and further driving down second-home prices.
Prices in the second-home market plunged by more than a third in the past five years as prices for primary residences fell by a quarter, according to the National Association of Realtors’ latest Investment and Vacation Home Buyers Survey.
“A lot of people who walked away from properties walked away from vacation properties because it doesn’t really affect their property overseas,” said Rogers, the Kissimmee property manager. In other words, foreign buyers were able to maintain their credit ratings back home even after their U.S. investment properties slumped in value and they stopped paying their mortgages, triggering foreclosures and repossessions.
Looking ahead, the second-home market is likely to heat up further, said Lawrence Yun, chief economist for the national Realtors group.
In the association’s latest survey, eight of every 10 people who responded indicated that they considered this to be a particularly good time to buy a vacation home – and one-third of the second-home owners said they were likely to consider purchasing yet another vacation home within two years.
“Given that the number of people who are in their 40s is somewhat larger than the 50-somethings, the long-term demographic demand for purchasing vacation homes is favorable,” Yun said, “because these younger households are likely to enter the market as their desire for these kinds of properties grows and individual circumstances allow.”
© 2012 The Orlando Sentinel (Orlando, Fla.), Mary Shanklin, The Orlando Sentinel, Fla. Distributed by MCT Information Services.