what we really want to know about
second homes
what it takes to
A family magnet or a diversification strategy? A discretionary purchase or a shrewd investment? Our issue goes to press with the April 5th announcement by the National Association of REALTORS® (NAR) still reverberating in the news: Forty percent of all 2005 residential purchases were for second homes. “That is not entirely surprising,” said Earl Lee, president, Prudential Real Estate Affiliates, Inc. “The same generation of Baby Boomers who transformed the fast food industry and made SUVs their vehicle of choice even as gas prices kept rising are now looking differently at retirement. They want second homes not just for investment, but as vacation getaway options, country showplaces or convenient pied-a-terres in the city.” NAR researchers, who are now studying exactly why people purchase second homes and how they plan to use them, will publish their findings soon. Meanwhile, inquiring minds are asking some interesting questions: In second-home areas that attract the wealthy, what does it take to get in the game? “In the Hamptons there are so many factors,” said Paul Brennan of Prudential Douglas Elliman Real Estate in Bridgehampton, NY, discussing the popular Manhattanite weekend getaway. “Assuming a livable weekend home ‘on the south side of the highway,’ one to three million dollars is the starting point.” But that’s still driving distance to the ocean. “Oceanfronts start at $15 to $20 million,” explained D E L A C Brennan. “Right now we have an oceanfront at $62 million and 40 acres of oceanfront for $105 [million].”
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Just three hours south of the Hamptons is the barrier island of Brigantine, NJ, one of the fastestgrowing second-home meccas in the Mid-Atlantic region. Here, property values have quadrupled in less than a decade. “Condos on a beach block can still be found for $250,000,” said Margaret Schwabe of Prudential Fox & Roach, REALTORS® Brigantine branch. “But so much depends on which part of the island you want to live on. The north end has more affordable homes, say for $500,000, but they’re twenty to forty years old and about 1,500 sq. ft.” What if you’re looking for something really nice? “For a million or more you can find a beautiful town home on the ocean or bay,” Schwabe said. “For $3.5 million you can buy a new oceanfront in the A Zone [considered the premier residential section on the island].” As beauty is to the eye of the beholder, the perspectives and pocketbooks of second-home buyers determine what they look for and what they’re willing to pay. According to findings by NAR, there were 3.34 million second-home sales in 2005. Of
dollars can buy a home within five miles of the slopes, but it might not be new construction. For $1.5 million, you can buy a very nice ski-in, ski-out condo— and for $2.5 to $8 million, you’ll find new, top-of-the-line construction and luxury amenities right on the slopes. “While older condos and town homes cost less, they’re very rare,” explained Pam Vanetta of Prudential Steamboat Realty. “For something nice in Steamboat, expect to pay one thousand dollars per square foot. In comparison to other Colorado ski markets, we’re a bargain.”
LEFT: Logs from British Columbia were used to build this $895,000 haven in Angel Fire, NM. PHOTO COURTESY OF PRUDENTIAL ANGEL FIRE REAL ESTATE.
second-home buyers’
perspectives and pocketbooks determine what they look for
these, 12 percent purchased their second home for personal use—and more than two-thirds of them reported they do not intend to rent their second homes. [Remaining respondents cited “investment” as their primary reason for purchase.] NAR cites the average second home price at $204,000. However, just as with primary residences in affluent communities, the price of market entry is greatly influenced by destination desirability and proximity to natural resources and recreational amenities. For example, in the skier’s paradise of Steamboat Springs, CO, one million
Perhaps not so well known is the emerging second-home market of Angel Fire, NM, a Sangre de Cristo Mountain ski destination and all-season playground that is rapidly gaining in popularity. Here, today’s average home price is about $142 per sq. ft., according to Mike Woolley of Prudential Angel Fire Real Estate; but new construction is quickly heating the market. Like most destination areas, second-home buyers come from just about everywhere. Buyers are flocking to Angel Fire from Texas, followed closely by Californians and Floridians. “Our typical single-family second home is $350,000 for 3 bedrooms and 2.5 baths—2,000 sq. ft. on threequarters of an acre,” noted Woolley. Not surprisingly, however, there is a wide range of product and pricing in this market, Woolley continued. “For $500,000 you’ll find 2,800-3,500sq.-ft. of newer construction with views of the mountain range, upgraded baths and kitchen amenities. For $895,000 you can have a new 3,500 sq. ft. British Columbian log cabin on a full acre with views. For $1.4 million you can find top-of-the-line new construction on ten to twenty acres that back up to a national forest.” Another emerging market, in North Carolina’s high country, boasts the best skiing in the southeast as well as summer fly-fishing
$1.7 million second-home “castle” on Lake of the Ozarks, MO. PHOTO COURTESY OF PRUDENTIAL LAKE OZARK REALTY.
and three-season biking and canoeing. Bob DeCamera of Prudential Mountain Properties in Boone describes a typical price-ofentry second home as “a new 1,700-sq.-ft., 3-bedroom, 2-bath log cabin with a mountain view on a one-acre tract for $300,000.” Located just an hour from Winston-Salem and two hours from Charlotte, Boone appeals to buyers who, according to DeCamera, “want an escape from civilization even if it’s just for a weekend. Second-home buyers who want something more luxurious or private “can spend $500,000 for new construction that’s really special on 15-20 acres in a secluded mountainside setting,” said DeCamera. Susan Spica of Prudential Lake Ozark Realty in Osage Beach, MO believes the Lake of the Ozarks second-home market is “the bestkept secret.” A wide range of home settings, from lakeside to secluded,
give second-home buyers plenty of choice. “While our average sales price is $230,000, our starting price for properties more likely of interest to second-home buyers is about $500,000,” said Spica. “For that price, you’ll likely find a seven-to-10-year-old, 2,2003,200-sq.-ft. home that needs updating. From there, pricing depends upon setting, views, home type, age and condition.” Boating, by far the most popular activity in the region, makes lakefront location and boat docks the most sought-after features. According to Spica, “We have a lot of million-dollar second homes. Typically these will be 4,000 sq. ft. or more on the lake.” But Lake of the Ozarks doesn’t stop there. “We have a knock-down gorgeous 4,000-sq.-ft. property with three levels and a pool under contract at $1.7 million. Everything is top-ofthe-line and it overlooks the lake. We call it ‘the castle.’”
Private dockside view of Smith Mountain Lake, Virginia.
A million dollars can also buy a lakeside single-family home and great views of Smith Mountain Lake in Virginia, a resort town forty-five minutes from the Roanoke airport. “In the past five years, we’ve been discovered, and now we see buyers coming from all over the world,” explained Cathie Daniels of Prudential Waterfront Properties. A man-made lake that offers fishing, sailing, and boating, Smith Mountain Lake opened its first golf course community in 1980 and secondhome buyers soon followed. Today, many of them have retired and made the community their year-round residence. According to Daniels, “Just to get into our market, a new or existing condo with 1,000-2,000 sq. ft. starts at $400,000.” For that you can expect two bedrooms and baths, onthe-lake location with boat access, a slip or a dock.” While existing singlefamily homes can be found from $500,000, even those priced at $1
million are being torn down by new buyers. Daniels sees a trend toward buyers who want to recreate the look of luxury and amenities of their primary residences in their second homes. “The traditional lake house is a thing of the past,” explained Daniels. “Prices here are driven by topography, view, exposure, location and proximity to the lake. You can tear a house down, but land is a finite thing. You can’t change the lay or location of the land.” The desire to be close to water is one of the most cited reasons secondhome buyers purchased their properties in 2005, according to NAR. And perhaps no one knows this better than Helen Sphorer of Prudential Resort Realty in St. George Island, FL. Her brokerage sells properties on the ocean, bay and river— and like other resort area brokers, Sphorer agreed that the price to “get into the game” depends on what’s important to the buyer. “For example,” said Sphorer, “for just over $500,000 you can buy a new condo with an unobstructed ocean view across the street from St. Joe, San Blas or Mexico beach.” Owners of deep-water boats are drawn to the Carabelle River,
which she described as being a more affordable area. “For $275,000 you can buy a building lot with water access in a nice subdivision on the river,” Sphorer said. Newly constructed condominiums in nice subdivisions start at $850,000, and new singlefamily homes cost about $1.4 million. St. George Island is a popular second-home setting for wealthy buyers who live within a one-day drive of the Panhandle resort town. On St. George, the average home price is $1.2 million. “While condos might start at $500,000,” Sphorer explained, “very few exist. A singlefamily home on the water that’s in the business district—something really special—starts at $1.4 million,” The central business district also has homes on half to a full acre within a gated community for $2.5 million. Added Sphorer, “For something spectacular on St. George Island, expect to pay in the $3.4 million range.” Whether you choose a ski area, a secluded log cabin, a high-rise condo or a coastal estate, the real joy of owning a second home, most buyers agree, is having the luxury—at least part of the time—of living where you most like to play.
At just over 2,600 sq. ft., this 4-bedroom, 3.5-bath St. George Island oceanfront is listed for $2,550,000. PHOTO COURTESY OF PRUDENTIAL RESORT REALTY.