Up­side to the down­turn: Lux­ury homes for sale dirt-cheap

The Washington Times Weekly - - National - BY AN­DREA BILLUPS

There is a sil­ver lin­ing for some in the cur­rent re­ces­sion cloud. Homes, many in some of the posh­est neigh­bor­hoods in the coun­try, are at their most af­ford­able rates in decades.

“You are looking at the best af­ford­abil­ity con­di­tions since we have mea­sure­ment back in 1970,” said Wal­ter Molony, spokesman for the Na­tional As­so­ci­a­tion of Real­tors, which cal­cu­lates a monthly in­dex of the re­la­tion­ship among home prices, mort­gage in­ter­est rates and fam­ily in­comes.

De­spite doom-and-gloom re­ports over home fore­clo­sures in the past year, the out­look is good for prospec­tive home­buy­ers who were shut out dur­ing the hous­ing bub­ble a few years back, real es­tate agents across the na­tion say. Many peo­ple, they say, were stymied by in­flated prices and risky mort­gage strate­gies. Some of those top houses or con­dos — in­clud­ing va­ca­tion and sec­ond­home prop­er­ties — are now avail­able at sig­nif­i­cantly re­duced prices.

Con­dos in tony Coral Gables, Fla., near Mi­ami Beach, are go­ing for $100,000 as a mar­ket glut con­tin­ues in the re­sort area with the Mir­a­cle Mile, fea­tur­ing up­scale spe­cialty shops and de­signer cloth­iers. Up the coast in Palm Beach County, Fla., prop­er­ties can be had for as low as $25,000, in­clud­ing plenty of prime spots in down­town West Palm Beach — within walk­ing dis­tance of the ocean and the in­tra­coastal wa­ter­way, said bro­ker Karen Lind­holm of Red Reef Realty Inc., in Boca Ra­ton.

“Ev­ery of­fer I put in has four of­fers wait­ing,” Mrs. Lind­holm said of the uptick in in­ter­est not only from in­vestors but from first­time home­buy­ers ea­ger to cash in on some steals in ar­eas that pre­vi­ously might not have been at­tain­able.

Many of the most re­cent buy­ers held on when they couldn’t af­ford to buy three and four years ago and have saved large down pay­ments that now al­low them to get into dream homes as the mar­ket swells with val­ues, agents say. Sell­ers have been forced to com­pete with fore­clo­sures and short­sales in or­der to make a deal.

“It’s just amaz­ing, an un­tapped gift,” Mrs. Lind­holm said of the wide-open Florida mar­ket.

“We are told ev­ery day that every­one is in trou­ble, but most peo­ple in Amer­ica are not in de­fault. The ma­jor­ity of peo­ple are pay­ing their mortgages. And right now, there are a slew of buy­ers out there, but it’s just not be­ing re­ported.”

In White Bear Lake, Minn., real es­tate agent Teri Eckholm said her Twin Cities busi­ness has been on the rise since Novem­ber, af­ter the pres­i­den­tial elec­tion.

While cov­eted lakeshore prop­erty in her area was tough to find a few years back, now she re­ports 30 homes avail­able for prices in the $200,000 range. She said she is sell­ing to many first-time home­buy­ers in the Min­neapo­lis-St. Paul area who are get­ting into homes at prices that al­low them to af­ford their mortgages without wor­ry­ing about fu­ture re­fi­nanc­ing schemes and to build eq­uity right away.

“Our lakeshore is re­ally af­ford­able. Acreage is af­ford­able in ev­ery area,” she said of the bur­geon­ing mar­ket. “Once you get over $300,000, there are so few buy­ers that if a seller looking to move up can get their first home sold — a home in the midrange with some eq­uity — it’s pos­si­ble to move up to the lit­tle McMan­sions or larger lakeshore homes.

“Right now, you have your pick of the homes over $300,000 and $400,000. Most of the buy­ers are un­der $200,000.”

Sale prices for ex­ist­ing con­do­minium or co-op homes fell by 20.6 per­cent in 2008 in the U.S. com­pared with the pre­vi­ous year, with a me­dian price vary­ing from a high of $216,600 in the North­east to a low of $139,000 in the South.

Me­dian sale prices for ex­ist­ing sin­gle-fam­ily homes dropped 13.8 per­cent na­tion­wide in 2008. Homes in the North­east are go­ing for $232,100, while me­dian prices in the Mid­west are at $136,400.

The Real­tors as­so­ci­a­tion’s pend­ing home sale in­dex for Jan­uary found that sales con­tracts signed in Jan­uary dropped 6.4 per­cent be­low the rate cal­cu­lated for Jan­uary 2008. The group’s chief econ­o­mist, how­ever, said that while near-term sales will re­main soft, fu­ture sales are ex­pected to rise in the wake of the Obama ad­min­is­tra­tion’s $8,000 first-time-buyer tax credit.

Those on safer fi­nan­cial ground and looking at life­style pur­chases for va­ca­tion or re­tire­ment can find plenty of prop­er­ties in high­fore­clo­sure ar­eas, in­clud­ing Cal­i­for­nia, Ari­zona and Las Ve­gas, Mr. Molony said. The sec­ond­home de­mand is ex­pected to grow as the na­tion’s baby boomers and younger gen­er­a­tions look to re­tire or at least plan for it, he said. Sec­ond-home pur­chases made up one-third of all trans­ac­tions in 2007, ac­cord­ing to the Real­tors data.

“Al­though there is a nat­u­ral ten­dency to pull back from dis­cre­tionary pur­chases in eco­nomic down­turns, the long-term un­der­ly­ing de­mand for sec­ond homes looks fa­vor­able be­cause there are large num­bers of peo­ple in their prime years for buy­ing a sec­ond home,” Mr. Molony said. “A no­table per­cent­age are now pay­ing cash and are di­ver­si­fy­ing as­sets.”

Cur­rently, 39.2 mil­lion peo­ple in the United States are ages 50 to 59, and they have dom­i­nated sales over the past decade. There are 44.8 mil­lion peo­ple be­tween 40 and 49, and an­other 40.7 mil­lion are 30 to 39.

“Th­ese younger seg­ments will drive the sec­ond-home mar­ket over the next decade,” Mr. Molony said.

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