Vacation deflation

New Yorkers see values in their go-to second home markets suffer


This three-bedroom home on 41 acres in Woodstock, N.Y., sold for $899,000, just below its asking price

With the mercury low and snow continually hammering the city, escaping the five boroughs on weekends has become a must for many New Yorkers. But they may be taking cold comfort in their getaways, since their second homes aren’t worth as much as they used to be — sometimes by a long shot.

From the Rockies to Central America, home values in destinations popular among New Yorkers are off by as much as 30 percent, with little price recovery seen in 2010, according to an analysis of sales data.

A slew of real estate offices that lined main drags in ski-friendly towns in Vermont are shuttered. Buyers in Bermuda seem to circle endlessly without purchasing, which keeps inventory high and depresses prices, according to real estate analysts.

Still, some more midpriced areas that New Yorkers frequent, like Costa Rica, are showing signs of life. And with the collective sense that the worst has passed, many brokers are feeling optimistic about the coming months, even if prices could take many more seasons to completely rebound.

Aspen/Snowmass

Sellers in Colorado’s premier ski country — where New Yorkers and Californians flocked in equal measure during the boom and where vacation homes make up 80 percent of the market — seemed to ignore some market realities in 2010.

Buyers, however, held out for bargains.

Of the 65 homes that sold in Aspen in 2010, almost half of them saw some kind of major price chop, with a 21 percent reduction on average. For example, one three-bedroom condo, on a ski slope with chairlift views, recently saw its price reduced from $3.35 million to $2.995 million, according to listing broker Maureen Stapleton of Morris & Fyrwald Sotheby’s. And a significant number of listed homes sat on the market for more than a year.

Similarly, in Snowmass, where prices are slightly lower, the 26 homes that sold last year had to be discounted by 22 percent before they found a buyer, said Stapleton, who used statistics provided by the Aspen Board of Realtors’ Multiple Listing Service.

It seems that boldfaced New Yorkers may have been hitting the slopes closer to home the last few seasons, supplanted by Australians who are flush with money from trade deals “supplying everything” to China, Stapleton said. If New Yorkers are there, they are hesitant to buy, she added, though many “are coming back to look again during Presidents’ Week.”

Southern Vermont

A year ago, there were five real estate offices on Main Street in Manchester, a town where New Yorkers have long wintered. As 2010 ended, though, there were just two, which may illustrate how the second-home market there has cooled, according to Laura Beckwith, a broker with Josiah Allen Real Estate.

“Recessions in Vermont are different. They last for a while,” Beckwith said.

The slide seems long and steep. In 2006, homes in her valley area — 60 percent of which are second homes — averaged $457,000. But in 2010, that average had slipped to $350,000, according to stats from the Northern New England Real Estate Network’s Multiple Listing Service.

Up in the nearby mountains, where ski areas Stratton and Bromley are located, and where 90 percent of the homes are part-time residences, average prices were $450,000 in 2006 but $300,000 in 2010.

But some New Yorkers who waited for prices to drop for years are now swooshing in. A “publisher of a major magazine” who has stayed at the nearby Equinox hotel when visiting recently closed on a home after it was discounted to around $500,000, Beckwith said.

Plus, the waiting game helped a New York “financier” who finally signed a contract on a Victorian fixer-upper with wraparound porches after its price fell from about $900,000 to $500,000, she said.

While the Berkshires and Litchfield County used to steal away buyers because they are much closer to Manhattan, Vermont is finally making gains because prices are so depressed, Beckwith said.

Bermuda

To a large degree, the island — a two-hour flight from New York and a regular vacation spot for Mayor Bloomberg, who owns a home there — is self-selecting. Strict residency rules make it tough for off-islanders to buy there unless a house is worth about $7 million ($1.5 million in the case of a condo), brokers said.

As a result, less than half the homes are truly vacation properties. And most of those who do vacation there do so because of their corporate connections, brokers noted.

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“It’s very rare that we get somebody who just randomly buys in Bermuda,” said Kendra Mello, a manager at Bermuda Realty Coldwell Banker.

Plus, the market has been sluggish lately. In a trend echoed across other luxury markets, prices and activity have plummeted from their peak. Bermuda saw about $30 million in overall sales last year, versus $80 million in 2005, according to Coldwell data.

Brokers said people with strong New York connections make up about 80 percent of the second-home buyers, with the rest from other East Coast cities and Europe. But lately New York buyers, perhaps spooked by corporate troubles, have taken a distinct “wait and see” attitude in the last 18 months, said Mello. Still, interest has seemed to tick up over the last few months.

For those who qualify, and have deep pockets, properties to consider could include the “White House,” a beachside four-bedroom for $6.95 million, which is at the lower end of the market.

Costa Rica

During the Central American country’s boom years last decade, values shot up so high, particularly along the northwestern Pacific coast, that some New Yorkers were priced out to next-door Nicaragua, said Chris Simmons, an agent with Re/Max Ocean Surf in Tamarindo. He said a majority of homes in Tamarindo are seasonal, noting that about half of those are rentals.

Now, though, with home prices down 30 percent from 2007, many buyers are coming back, Simmons said, often to the beachside condos popular with New Yorkers.

In 2010, those properties sold at an average of between $150,000 to $300,000, he said. It’s also helped that more well-heeled buyers might gravitate to units a block from the ocean at the new 24-unit La Perla Tamarindo, a condo complex that has two pools, a gym and underground parking, he said. Three-bedrooms there start in the mid-$400,000s. The reason New Yorkers are heading there, as opposed to Puerto Rico, which is an occasional rival, has much to do with planes. Direct flights began a few years ago, making Costa Rica a more viable destination that it was a generation ago, brokers say.

Still, New Yorkers usually rent for many years before buying, Simmons said.

Catskills

A few years ago, this mini mountain range, whose farthest reaches are a two-and-a-half-hour drive from Manhattan, was poised to become the next Litchfield County, with old farmhouses and lots of acreage at a fraction of Connecticut’s prices.

That didn’t happen for the area, home to ski resorts like Hunter and Windham.

But the region did hold its value surprisingly well, given the housing market crash. In 2010, the average price of the 350 homes that sold in the protected Catskill Park — about 50 of which were second homes — was $318,000 — about the same as in 2007, said Mike Schneller, a manager of Win Morrison Realty in Kingston. He said many buyers rent in the city and are buying their “second” homes first.

That said, though, New York buyers seem to be a little more reluctant to come around now, worried that the stalled economy will cramp the area’s long-promised revitalization. They also might be finding that Connecticut is suddenly within their reach. Instead, Catskills buyers tend to be from New Jersey or Westchester County, brokers say.

But huge swaths of property still abound. Recent area sales included, at the high end, a three-bedroom contemporary with a pond, pool and horse barn on 41 acres, for $899,000, which was just below asking price. “People pretty much come up here to have lots of land,” Schneller said.

U. S. Virgin Islands

St. John, which has the highest concentration of New Yorkers of the three U.S. Virgin Islands, was headed for a modest improvement in activity in 2010. But some deals inked during the year never closed, making 2010 actually worse than 2009, a rare twist.

Last year, there were 20 sales on the island, about a dozen of which were second homes costing more than $1 million, said Lynn Giovanna, a broker with Islandia Real Estate.

In 2009, by contrast, there were 22 sales, with about 10 above the key $1 million mark, she said.

Supply is limited on St. John by the fact that three-quarters of the hilly terrain is a national park; there also is no airport. That constrained supply usually helps prices, though values are still off by about 20 percent from 2006, Giovanna explained.

But the best marketing strategy of all for New Yorkers may come by way of Hollywood. Highly publicized visits over the last few years to Caneel Bay, a luxury resort, by celebrities like Brad Pitt and Angelina Jolie, in addition to glowing travel stories in the New York Times, brokers say, have raised the island’s profile among New Yorkers.

Still, price is often the most seductive ploy. “Sellers have never been this negotiable,” Giovanna noted.