Dream Home

Now is the time to consider buying a vacation home

By John Carman

Who hasn't dreamed of owning a home away from home, a cozy little vacation spot to escape the city life and relax in the midst of mountain woods or breathtaking ocean scenery? Alas, soaring home prices fueled by the booming stock market in recent years have kept many consumers from realizing their vacation home dreams. But now the time may be right for buyers sitting on the sidelines to finally get that second home.

With the real estate market finally coming back to earth, prices for second homes in the Lake Tahoe and Monterey areas have leveled off, and inventory has started climbing again. In fact, Tahoe hasn't seen such a large selection of homes in more than two years. Although most areas have seen median prices inch up in recent months, it's nothing like the steep climbs of 1999 and 2000. And some real estate experts foresee prices even dropping a bit in the high-end neighborhoods in the months ahead.

For the first time in a long time, buyers will have the selection and time they need to shop around for the vacation home of their dreams without worrying about getting into bidding wars with other potential buyers.

Besides the slowing prices and growing inventory, there are other reasons to look into a second home now. Purchasing a second home can be a diversifying investment to help balance out a stock portfolio. Buying a second home is more affordable now in light of some of the lowest interest rates for mortgages in years, which seem to be continuing to drop. Don't forget there are also tax benefits for most second homeowners (the rules are complicated, so talk to a tax adviser to see whether the situation is applicable). Finally, if history is any indication, California real estate values have always held up quite well, making homes--and second homes--a wise, longterm investment.

So what should you do if you desire that "home away from home?"

Advice for buyers

Find a good agent who really knows the area, the neighborhoods, and can help find the best value and the perfect match. If a buyer is already working with an agent locally, contact them for a referral of an agent in the area of interest. Although prices haven't dropped in most areas, there is a great selection of homes to choose from. Always consider location, scenic views, locality to area attractions and any unique amenities when buying a home as it affects appreciation. Don't forget that without the wild frenzy of bidders and multiple offers, buyers can take their time now to find the right home at the right price--and with no pressure. Buyers are back on a level playing field with the sellers. Take advantage of the agent's negotiating skills.

Advice for sellers

List with a Realtor who specializes in the area and knows the competition and going prices for homes. Remember to be realistic: this is not the same market as it was in 1999 and 2000, and expectations need to be aligned with today's market conditions. A Realtor will help you to determine a competitive price.

There are a lot more negotiations going on, so working with an agent is a good way to help make sure you get top dollar for the listing. It is important that the home is in good condition and staged appropriately, so the home becomes more appealing to buyers when it is repainted, landscaped and cleared of any clutter.

There may never be a better time to buy a vacation home. For the best guidance, have a one-on-one discussion with an experienced real estate professional.

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John Carman is manager of Coldwell Banker Northern California's Los Gatos office.

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