Resort and second-home real estate looks to improve in 2012

March 26, 2012 | Leave a Comment

By Lauren Ratcliffe
lratcliffe@scbiznews.com
Published March 20, 2012

Realtors specializing in resort and second home communities have reason to be optimistic in the coming year, according to an economist with the National Association of Realtors.

Lawrence Yun, chief economist with NAR, said that equipping Realtors with good data is critical in helping potential homebuyers understand what’s going on in the economy.

If Realtors can communicate the data, the public perception of what home values will do in the future will help fuel the upswing, he said at the National Association of Realtors Resort and Second Home Symposium on Kiawah Island.

“It’s not only about the right perception and the sentiment, but the actual data,” Yun said. “It has been very rough and tough, but now things are beginning to blossom and nearly everywhere, most parts of the country, sales are up.”

Increasing rent prices, job creation and a stabilizing stock market were among the national factors Yun suggested were driving the overall rebound of the housing market.

For the Realtors specializing in second-home markets, the downturn was especially rough, Yun said. But historically, that market swings more violently than the overall housing market — setting those Realtors up for big gains once the market turns.

Yun said traditional resort markets are seeing inventory shrink to two-month levels — and driving prices back up.

The Charleston-area resort market offers destination communities including Kiawah Island and other beach and waterfront communities. But Charleston isn’t yet considered a traditional resort community.

“South Carolina has always seemed to lag behind what people see as traditional resort markets in Florida,” Yun said. “But those markets have already started to pick up.”

Historically low mortgage rates also are set to rise, based on the data Yun has been receiving.

“The days of a 3.9-mortgage rate may have already passed,” Yun said. “People who set out to get the lowest rates may have already missed it.”

International business coming to the Charleston area by way of Boeing or shipping through the port is also likely to contribute to an increase in second-home purchases, according to Yun.

George Harvey, resort and second home chairman for NAR, agreed. He said many second-home buyers start out as repeat vacationers before venturing into the real estate market.

Vacationing provides an easy entry point into a community, Harvey said.

“After a five- to 10-year period, they may sell their primary residences and move permanently to their vacation homes,” he said.

Another factor stressed as a reason to be optimistic is the graying of the population. Yun said that demographic and economic indicators are suggesting that more people are of both the age and wealth status to fall into the second-home population.

Harvey agreed, adding that baby boomer wealth in some cases is coming not only from their own efforts but as an inheritance from their parents.

The rebounding of the stock market helps the boomer generation recover wealth they’d invested.

“They took a little bit of a hit,” Harvey said. “They are also poised to inherit a lot of wealth from their parents who were very frugal savers.”

Harvey added that investing in a vacation home may not be entirely for personal pleasure, as many boomers aren’t retiring completely, but instead transitioning to part-time work. Real estate is viewed as a personal expense, but also an investment for the future, he said.

“We’re in a perfect place for real estate investment (in the resort market),” Harvey said. “The worst is behind us and the upside is looking good. “


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