Home Sweet Homes: Second Home Markets Rise

Report Written: April 19, 2011, Sandra J. Carroll, CEO, Berkshire County Board of REALTORS

Despite economic challenges over the past year, consumers continue to invest in second home properties. Many Americans purchase second homes either as vacation retreats or investment properties. According to the National Association of Realtors® 2010 Investment and Vacation Home Buyers Survey, vacation- home sales in the U.S. rose 7.9 percent to 553,000 last year, up from 513,000 in 2008.

Half of vacation homes purchased last year were in the South, 21 percent in the West, 17 percent in the Midwest and 12 percent in the Northeast. Since our region is widely known as a cultural mecca of museums, historic sites, music, dance and art venues set amid spectacular scenic hills, dotted with

mountain streams and lakes and boasting outstanding year-round outdoor activities – this is a first and second homeowner’s dream spot!

Berkshire County residential sales in the first quarter of 2011 show a stable market in the prime second home areas. In Great Barrington, for example, inventory is the same as the first quarter of last year, yet the number of days a property is on the market dropped and the number of homes sold rose. According to the Berkshire County Multiple Listing Service, which monitors sales transacted by Realtors®, the total residential dollar volume transacted in Great Barrington this quarter rose almost 50% from levels in 2010, with $5.6 million in residential sales between January and March of 2011.

Year-to-date single family home sales in Stockbridge and West Stockbridge also reflect this same positive momentum, excluding a few very big sales in West Stockbridge and Sandisfield transacted so far this year. If we remove those big-sale anomalies from the statistics, the number of homes on the market is level or down from the 1st quarter last year, and sales are still rising at a modest pace.

Overall in Berkshire County, inventory is slightly down in the first quarter of 2011 compared with 2010 (-6%), which indicates the market is not flooded with excess inventory. The number of days a home is on the market for sale before an accepted offer is down (-25%), although some closings are taking longer to complete than last year. The number of residential properties sold during the quarter is up from the first quarter in 2010 by (+15%), sales volume is up (+21%), yet median sales prices vary widely from town to town. While each town has individual market strengths and weaknesses, countywide indicators are positive for the spring market.

As Wall Street stabilizes, we find Main Street following suit. Those that purchase appreciate the value of homeownership – as vacation retreats, investment properties and excellent ways for to diversify their portfolios.

There are approximately 7.9 million vacation homes and 41.1 million investment properties in the U.S. compared with 75.0 million owner-occupied homes. Vacation homes are in every state, with the most popular locations by the water or in the mountains. Vacation-home owners prefer close proximity to areas they spend recreational time or to natural attractions.

The typical vacation-home buyer in 2009 was 46 years old, earned a median household income of $87,500 and purchased a property that was a median of 348 miles from his or her primary home; about one-third of vacation homes purchased were within 100 miles of the primary residence.

Nationwide, investment homes sales accounted for 17 percent of the overall market in 2009, down from 21 percent in 2008. It is thought that demand for second homes will likely increase over the next decade as about 40.1 million people in the U.S. are ages 50-59, which are some of the prime years for buying a second home.

Real Estate Sales In Review: A look back at 2010 and a look forward to 2011

Report Written: January 25, 2011, Sandra J. Carroll, CEO, Berkshire County Board of REALTORS

According to the Multiple Listing Service database used by Berkshire Realtors, 2010 residential sales outpaced sales in 2009. The total dollar volume recorded was 18% higher than the previous year, up to $242,075,781 countywide. The number of units sold was up 6% to 876 single family homes. This increase, coupled with a slight increase in median sale price is a positive sign for our housing market. When looking at residential sales in a month-by-month comparison, they consistently exceeded the previous year. This indicates that the market continued to improve, even after the $8,000 first-time homebuyer tax benefit expired.

These market improvements were not excessive, so the forecast that our housing recovery will span several years is probable, and indicates we’ve clearly turned in the right direction.

In central Berkshire, news of an influx of well paying jobs may help our growth be a bit more robust than previously hoped. This good news could also help invigorate the multifamily market and encourage sales and rehabs of quality rental stock to help ease this new housing demand. The multifamily market has been down considerably after its all time high in 2005. Then, Realtors transacted $37,103,755 annually, down to only $11,111,000 in 2010. We also show the number of multifamily units sold down from 219 units in 2005, to 92 in 2010. The job market could offer a much needed boost for the multifamily investment market, for those wishing to create quality rental housing to meet emerging housing needs.

In southern Berkshire, we’ve seen a resurgence of sales of high-end homes, and attribute that to strengthening economic factors in the major cities, thereby encouraging the vacation and second home markets to restart after a period of falling values and sales. This resurgence bodes well for a slow and steady improvement in that market niche as well.

Currently, the Berkshire residential market has 15 months of inventory based on recent sale rates. A balanced housing inventory is typically at around 7 months (unless in a unique category, as some south county homes would be considered), so we do have room for growth. We also expect to see the traditional increase in properties coming on the market for the spring season, so inventory could increase a bit over the next few months, further increasing supply in the hopes of attracting greater demand.

Overall, condo sales remained fairly level over the previous year, transacting about 16 million in sales, yet jumped in the number of units sold to 71, up from 55 units sold in 2009. This reflects a decrease in the median sale price to $230,712, down from the high in 2009 of $306,731 median value of sold units. It should be noted that the primary decrease was reflected in the southern Berkshire condo market. Central condos sales outpaced those in 2009 by a rate of 23.6%.

You can clearly see, in every market throughout the county, areas of moving sales, growth and activity that surpassed the previous year. Some markets are moving more quickly than others, but overall, the revitalization has begun to take hold, good news about job expansion has further stabilized the market and we expect 2011 to continue on this same steady path.