LAST-MINUTE SHOPPERS, TAKE HEART: Plenty of swanky summer digs are yours for the taking.
From Carmel, Calif., to Newport, R.I., second homes with yachting docks, tennis courts, golf courses and infinity pools — to say nothing of the obligatory spectacular view — are languishing on the market. Prices are down an average of 20%, and as much as 30%, from their 2007 peak. Cash-strapped sellers, anxious to find buyers by summer, are slashing prices still further and often accepting low-ball offers, according to brokers across the country. But this downturn is different. Financial executives have seen multimillion bonuses go up in smoke, and wealthy folks everywhere saw part of their fortunes evaporate on the stock market last fall — losses that, for the most part, haven’t been recovered. The luxury summer-home market has also held up somewhat better than the total market for luxury homes, mainly because there are relatively few summer mansions in the battered winter meccas of Florida, Southern California, Las Vegas and Arizona. Thanks to exposure to those locales, the overall deluxe market is off about 25%, experts estimate. “In the past, the lower end of the market has recovered faster in terms of price appreciation, but I think this time around it is going to be different,” says Celia Chen, director of housing economics for Moody’s Economy.com. The lower end of the market will continue to be constrained by tighter lending standards. In contrast, the mayhem in mortgages has had less of an impact on the luxury market. Wealthy buyers traditionally pay cash for properties, and when they choose to borrow, their asset levels often make it easy to qualify. True, prospective buyers have been subjected to the same job and market losses as sellers, and many may have to sit out the market no matter how low prices go. But there is a lot of pent-up demand for high-end real estate, and that will drive the market as confidence in the economy returns, Chen says. Some buyers have already started venturing back into the market. Real-estate purchase volume among U.S. Trust clients, who have net worths of at least $5 million and investable assets of at least $3 million, increased 60% in March and April over the last two months of 2008, says Jan Reuter, managing director of residential real estate at U.S. Trust, Bank of America’s private banking unit. For second homes, volume increased by 200%, she says, “and we are seeing a big increase in inquiries.” Many brokers also say they have had a sharp increase in calls and showings in recent weeks. “There is definitely a pulse,” says Melanie Delman, broker at Lila Delman Real Estate in Newport. “It was quiet at the end of September and through the beginning of this year, but we are out there with clients seven days a week now.”
With sellers so eager to strike deals, it is entirely possible for a buyer to sign the closing papers today and move in by the Fourth of July. “It can be done in 30 days, easy,” says David Bindel, a broker at John Saar Properties in Carmel, Calif. If no financing is involved, the turnaround can be even faster, he says.