Price rise lagging on 2nd homes

Home prices in vacation areas are on the upswing with the rest of the housing market but not as much.

As of May 1, median asking prices per square foot for homes in vacation areas were up 1 percent from last year compared with a 7 percent gain for other areas, according to data pulled from millions of listings on real-estate website Trulia.

Prices in vacation areas are rebounding more slowly than prices generally because vacation homes are luxuries and luxury spending takes more time to recover after a severe recession, says Jed Kolko, Trulia chief economist.

In Phoenix, median home prices were up 19 percent year-over-year in March, according to data from CoreLogic. But prices in the vacation hot spot of Sedona, about 120 miles north, are not up as much, says associate broker Gila Hager-Sherman of Russ Lyon Sotheby’s International Realty in Sedona.

One reason? Phoenix has a lot of investor buyers who are turning homes into rentals. In Sedona, “people don’t buy to rent. They buy to live,” Hager-Sherman says.

Trulia defined vacation areas as those in which at least a quarter of homes are used occasionally or seasonally, based on the 2010 Census.

Demand for vacation homes is being propelled by the same forces as the overall market, including a stronger economy and stock market. Sales will improve more this year because of increases in household wealth, says Lawrence Yun, the National Association of Realtors’ chief economist.

Vacation-home buyers also see now as a good time to buy, says Diane Saatchi, agent with Saunders & Associates in the Hamptons on Long Island. “They think the bottom is here, and they’re tired of waiting,” Saatchi says.

Nationwide, vacation-home sales were up 10 percent last year, accounting for 11 percent of all home sales, says the National Association of Realtors. That compared with a 17 percent jump for primary-residence purchases.