If you have clients who have been priced out of your market, they may want to consider vacation homes as an investment and to grab a piece of the American dream of homeownership.
For these homeowners, a Forbes report noted that they may rent in the city where they work then commute to vacation homes on weekends and holidays.
In markets like California, this option makes perfect sense in today’s residential real estate market, according to Real Estate Agent Keith Markovitz, of TTK Represents, HK Lane /Christies International Real Estate in Palm Springs.
“We are seeing this pretty frequently with buyers from Los Angeles and San Francisco who have rented in great neighborhoods where they can’t afford to buy. They buy in Palm Springs because they love it and now they can own something. Since jobs are so much more flexible now with virtual offices you can be much more mobile which works for this kind of buyer.”
In the Los Angeles market, a tear-down can top $1 million, particularly in the hot neighborhoods like West Los Angeles, Westwood and Brentwood.
Data from Zillow indicates that a West Los Angeles two bedroom and one bath foreclosure at 1,021 square feet minus a garage is estimated to sell for $1,270,085.
There’s not much better news for San Francisco homebuyers. Zillow has a 485-square-foot studio condo built in 2016 for sale with a listing price of $649,000. It has an estimated mortgage of $2,532. Then throw in another $384 for the HOA payment, and you are close to $3,000 a month for the privilege of owning one room and a bathroom.
For some homebuyers reconfiguring the American Dream into a vacation home has worked out better than owning pricey real estate.
As values heat up in some other key markets, like Boston, New York City and Miami, the vacation home option may prove to be an attractive option for clients who find themselves priced out of homeownership.
As agents, it is an option to keep in mind when working with these clients.