Home Business Tech Markets Entrepreneurs Leadership Personal Finance ForbesLife Lists Opinions Blogs E-mail Newsletters People Tracker Portfolio Tracker Special Reports Video & Audio Commerce Energy Health Care Logistics Manufacturing Services Technology Washington CIO Network Digital Entertainment Enterprise Tech Infoimaging Intelligent Infrastructure Personal Tech Sciences & Medicine Bonds Commodities Currencies Economy Emerging Markets Equities Finance Human Resources Law & Taxation Sales & Marketing Management Technology Careers Compensation Corporate Citizenship Corporate Governance Managing Philanthropy CEO Network Reference Estate Planning Funds Investment Newsletters Retirement Strategies Taxes Collecting Health Real Estate Sport Travel Vehicles Wine & Food 100 Top Celebrities 400 Richest Americans Largest Private Cos World's Richest People All Forbes Lists Business Opinions Investing Technology Opinions Washington & The World Companies People Reference Technology Companies Events People Reference

Home Improvement
Summertime And The Renting Is Easy
Betsy Schiffman

Homeowners in summer vacation spots like Martha's Vineyard or Lake Tahoe are desperate. An ad for a Hamptons waterfront property in The New York Times says it all: "Avail 5/25 to 9/13. Must fill. [Will consider] all offers/options."

The homeowner that placed the ad--who insisted on anonymity--admits he's concerned he won't be able to rent his house out. "I would absolutely negotiate on price. The thing is, I'm not getting a lot of calls. Last year I'd get maybe ten calls a week. This year I'm getting three."

It's a drastic departure from recent years. For most of the 1990s, slowpoke renters that began looking for a summer getaway in May were usually out of luck. Waterfront homes were often booked for the season by March or April, and anyone that didn't move fast enough left either having to rent from the (still-overpriced) dregs of the market or face a summer of long hot urban weekends.

With mortgage rates at a 30-year low, would you rather
Buy a summer house
Rent a summer house
Freeload off your friends
View Results
It's a different story now. Mortgage rates are at a 30-year low so summer vacationers are buying instead of renting. People that normally would have spent $20,000 to $60,000 on a summer rental home are putting cash towards a down payment on a second home. As a result, the sales market in resort towns is heating up while the rental market is cooling off. Earlier this month, the National Association of Realtors reported that existing home sales reached a record high of 6.54 million sales in the first quarter--a 9% increase over last year.

Of course, every market is different, but brokers across the country are seeing the same thing: Sales for homes priced at $1 million and under are showing remarkable momentum. In fact, many brokers are concerned about an inventory shortage.

"I've got a couple clients who are willing to spend a million dollars on vacation homes and they can't believe how few homes there are," says Jack Cotton, president of Cotton Realty in Cape Cod, Mass.

It's a sentiment echoed on the other side of the country in Lake Tahoe, Calif. Local brokers there say they can't keep $500,000 homes on the market. Not only are the midend properties selling quickly, they're also selling at premium prices after bidding wars.

By contrast, the Tahoe rental market is only showing faint signs of life. Usually by the end of May, rental homes would be booked at an 80% to 90% occupancy rate. This year, however, the occupancy rate thus far is estimated to be sitting at about 50%. But brokers are still optimistic that they'll see a flurry of last-minute activity as vacationers try to negotiate better deals in the next few weeks.

On Hilton Head Island, sales were mostly flat last year. This year, they're hopping. Gerry Prud'homme, a broker at Sea Pines Realty on Hilton Head Island, says interest peaked in February and in April Sea Pines hit an all-time monthly sales record of $60 million.

"To some extent, we're seeing first-time buyers that are avoiding the stock market," Prud'homme says. "Some of the buyers are repeat customers that are looking to exchange property and defer taxes. And we also have a very large drive market--people looking to buy a vacation home in a place they can drive to."

If you're still looking to buy a home now, it's probably too late for this summer. But just for fun, we scouted out some prime picks for vacation homes all over the country. And despite realtors' concern about a shortage of homes in the $500,000 to $1 million price range, we found quite a few gems. Click below and shop for yourself.

1 of 1

Article Controls

Related Sections
Home > ForbesLife > Real Estate

News Headlines | More From Forbes.com | Special Reports
Subscriptions >

Free Trial Issue of Forbes Forbes Gift Subscription
Subscribe To Newsletters Subscriber Customer Service
Buy Audio Version of Forbes

Trading Center
Brought to you by the sponsors below

CEO Book Club more >
The Philosopher Kings Of Hedging
The Philosopher Kings Of Hedging
Steven Drobny reveals insights from the hedge fund all-stars.
Laissez Faire In The Studio
Dunstan Prial
At Columbia Records, John Hammond made some of the greatest discoveries in American music.
Search Books

Advanced Search |  New & Notable
Also in Lifestyle
Most Satisfying Cars 2006
Audi Control
Acura RL Vs. Lexus LS
Volkswagen New Beetle Turbo S
British Cars We Wish They Still Made
The Cult Of Couture
Most Expensive Musical Instruments
Poster Wild
Ancient Manuscripts Found In Egyptian Monastery
Milwaukee Art Museum Denies Using Collection As Collateral
Most Luxurious Spas In The World
Very Vineyard
Belle Luxury Hotel
Hilton Head
Hotel Prices Rising
Home Movies
Lymington Luxury
Santa Barbara Splendor
'West Wing' Prez Sells The Cottage


SitemapHelpContact UsInvestment NewslettersForbes ConferencesForbes MagazinesForbes Autos
Ad Information   Forbes.com Wireless   RSS   Reprints/Permissions   Subscriber Services  
© 2006 Forbes.com Inc.™   All Rights Reserved   Privacy Statement   Terms, Conditions and Notices

Stock quotes are delayed at least 15 minutes for Nasdaq, at least 20 minutes for NYSE/AMEX. U.S. indexes are delayed at least 15 minutes with the exception of Nasdaq, Dow Jones Industrial Average and S&P; 500 which are 2 minutes delayed.

Powered By