Santa Fe still magnet for art, opera, adobe house lovers

The real estate market in Santa Fe, that ever-growing favorite of second-home owners who love art, opera and turquoise, is not what it was before the housing bubble burst, but there are buys to be had, as I learned last week. Example: a house with both a studio and a guest house on the property in the desirable South Capitol district (walking distance from the Plaza, if you're accustomed to lengthy walks) is offered at $625,000, which is $50,000 less than the original January price.

That may still sound high to bargain hunters, but the guest house is rented out for $775 per month and has private access, so income is already in place to help you pay the mortgage. It's a tri-level house with 2,443 square feet, 3 bedrooms, 3 baths, as pictured above. Interested? Call agent Laura Lichtenstein at Santa Fe Properties (505) 470-1098. And yes, we're related. (She's my cousin.)

No Smoking Cabins available in Great Smoky Mountains

The Great Smokies are a bargain this summer, says Money Magazine. In a feature on last minute deals, it recommends the gorgeous area of the Great Smoky Mountains National Park on the Tennessee/North Carolina border, with an assist from Christine Karpinski, author of How to Rent Vacation Properties by Owner. You can rent a wonderful cabin in these woods for as little as $80 a night (for a two-bedroom 1 bath cabin with fireplace and satellite TV) from companies such as Bearly Rustic. I love the fact that this bear-friendly property management firm specifies that some of its rentals are "no smoking."

Value House Shopping in Hamptons, Sanibel, Cape Cod and Other Locations

When is a million-dollar vacation home considered a bargain? When it was first listed at $2-million, of course.

To analyze the plummeting price of fancy second, third or fourth-home real estate, Business Week's Prashant Gopal and Zillow.com got together and gathered intel sampling some prime property areas and how well they were holding up.

Among those faring the best in the sampling included Laguna Beach, CA, Newport, R.I., Chesapeake Beach, MD, Lake George, NY, Destin, FL, and Oahu Hawaii

On the other hand, in the Hamptons, New York's platinum coast, BW quotes two brokerages as saying "home prices have dropped 23.5% to $675,000 in the first quarter, compared with a year earlier." And what can you get for that price? The 2006-completed house shown here, with 3 BR and 3 1/2 baths, on half an acre in East Hampton.

Here are a few other places to hunt -

Arizona
Hard-hit vacation market: Scottsdale
Annual home value change: -27%
Q4 home price: $437,423

Connecticut
Hard-hit vacation market: Mystic
Annual home value change: -17.2%
Q4 home price: $256,000

California
Hard-hit vacation market: Napa
Annual home value change: -21%
Q4 home price: $405,000

Florida
Hard-hit vacation market: Marco Island
Annual home value change: -27%
Q4 home price: $437,423

Florida
Hard-hit vacation market: Sanibel
Annual home value change: -18.1%
Q4 home price: $516,892

Florida
Hard-hit vacation market: Bonita Springs
Annual home value change: -19.8%
Q4 home price: $251,757

Massachusetts
Hard-hit vacation market: Cotuit (on Cape Cod):
Annual home value change: -14.2%
Q4 home price: $375,740

New Jersey
Hard-hit vacation market: Point Pleasant Beach
Annual home value change: -15.6%
Q4 home price: $513,659

Oregon
Hard-hit vacation market: Sunriver
Annual home value change: -15.7%
Q4 home price: $256,000

Bargain Hunters Heat Up Vegas Home Sales

More interesting than national numbers on sales of existing homes, both primary residences and second homes, is the growing appetite among shoppers in snapping up foreclosed properties at fire-sale prices.

"Homebuyers shrugged off economic worries and pounced on sharply discounted foreclosed homes in California, Nevada and Arizona, driving up sales last month across the West, according to two reports," the AP reported yesterday.

But the median price for these homes sold in the 13-state West region was down 11 % to $252,400. The red hot center for sales: Las Vegas, which in March saw its median home price fall "about 42 percent to $135,723."

No surprise here. Investors with cash see rock-bottom prices as a chance to take advantage of the opposite end of the Vegas home-building boom. One broker told Alex Veiga of the AP that his buyers were chiefly Californians. ""The biggest difference between now and the investors from '04 is these investors are buying them in full cash, and in '04 it was everyone buying them with zero-down loans."

Takeaway point: We seem to be entering the vulture phase of real estate enterprise.

Vacation Home Prices and Sales Plunged in 2008, says NAR. This is News?

Surely nobody following the economic crisis was surprised when the National Association of Realtors announced recently that second-home prices and sales fell in 2008.

The real question is: what now? Is there any good news that might pull sellers and real estate agent out of the mire?

In three words, I don't know... and I doubt anyone else does, either. There is anecdotal evidence that banks are beginning loosen up their purse strings a wee bit for primary homes. But vacation or second homes are being sold in large measure either for cash or with seller finanding, say experts.

The data from 2008 itself: bleak.

"The median price of a vacation home was $150,000 in 2008, down 23.1 %from $195,000 in 2007. The typical investment property cost $108,000 last year, which is 28 % below the 2007 median of $150,000," according to the NAR press release. The actual number of vacation homes purchased last year was down more than 30 %, while investment-home sales dropped more than 17 %.

The most important stat: "more than 4 out of 10 investment buyers and more than 3 in 10 vacation-home buyers paid cash for their properties. That's heartburn territory for sellers.

Reefs Club – Landmark Bermuda Hotel Sells Fractionals

Guests of the Reefs, a 62-year old family-owned boutique luxury hotel on its own idyllic beach in Bermuda, are known for their loyalty. Some have vacationed there 20, 30 and more times. Now the Reefs is counting on loyalists as well as newcomers to buy into its 19-unit private residence club. The Reef Club -- fractional-ownership two- and three-bedroom “villas” adjoining the hotel -- are nearing completion and will open July 3. (Photo above shows what it will look like when villas are completed.)

By Bermuda standards, the 1/10th ownership furnished fractionals are “affordable” -- $350,000 for a 2-bedroom, $410,000 for a 3-bedroom. (Another 13 % is tacked on in fees, taxes and closing costs.) Full ownership condos elsewhere on this adorable, expensive island start at over $1-million, although one real estate agent, Buddy Rego, said last month that no Americans went to closing on condos anywhere in Bermuda in the first quarter of 2009.

Bermuda’s restrictive laws on non-Bermudian ownership of property keep prices high. Yes, the worldwide recession is taking its toll. Since Reefs Club fractionals were first offered, 30 out of 80 early birds who had put down “soft” $5,000 deposits have opted to pull out, according to Chrissy Frith, membership director.

Nevertheless, Reefs president David Dodwell told me that he has no plans to lower prices, although he might consider some “value-added” incentives, such as rebates on certain homeowner fees for a period of time. The villas give Reefs fans a “rare opportunity,” he said, adding that some units might be used for overflow hotel guests during peak times. The villas building will also house a much expanded spa and fitness center.

To Buy, Or Not To Buy A Vacation Home Now?

An article from CNBC now circulating suggests this is the time to buy the vacation home you've always wanted. Why? Prices down... inventory up... interest rates low.

Nevertheless, those I've spoken to urge caution.

It's still difficult to get a second-home mortgage (CNBC's reporter agrees). Buyers must be ready to come up with a good chunk of cash-- at least 25 % in most cases, say experts.

Long-term trends positive?

CNBC quotes Walter Molony, spokesman for the National Association of Realtors, as saying that the market is“fundamentally healthy,” with a median price in 2007 of $195,000. He argues that while middle-age, middle-income folks -- i.e. baby boomers, are the main buyers now, Gen X and Gen Y (younger people) will come into the market right after them and will "fuel" the demand.

But you need to ask yourself how quickly those 20-to-45 year olds will recover from the current economic crisis. The older ones among them typically would be in their prime earning years. Instead, many are collecting unemployment insurance and more are sure to be in the same hole soon.

As CNBC concludes, buy for enjoyment first and investment value later. And "first-hand knowledge of the market will also help you avoid buying into a community that’s on the outs."