BOSTON – Leslie and Scott Tyree backed out of a contract in 2011 to buy a weekend place in Hilton Head, S.C., fearing they’d be anchored to a sinking market for second homes.
This year, the West Virginia couple pounced on a listing in the same resort town without visiting the property.
They bought the two-bedroom condominium in an oceanfront golf resort for $429,000 in April. Values this year in the Hilton Head area jumped 11.1 percent from the first five months of last year and sales rose 9.3 percent, according to the South Carolina Association of Realtors.
Prices are still down by about a third from 2007, near the real estate market’s peak.
We knew several other people were looking at it and it wouldn’t last long, said Leslie Tyree, 44, a lawyer who first saw the home two weeks before the closing.
We realized if we are going to do this at some point we might as well do it now.
The surging buyer confidence underpinning the year-old rebound in U.S. property prices – driven by mortgage rates near record lows – is spilling into seasonal communities from Lake Tahoe in California to the Berkshires in western Massachusetts.
Vacation-home demand relies on discretionary spending and typically lags behind the broader housing market by about one or two years, indicating secondary properties are on the cusp of a recovery, according to Jeff Meyers, a housing-research consultant with Beverly Hills, Calif.-based real estate firm Kennedy-Wilson Holdings Inc.
We’re starting to see a lot of resort markets really strengthen, Meyers said. Prices going up in the core markets have a big influence on what people do with their vacation homes and their ability to purchase them.
U.S. home prices rose 12.1 percent in April, the biggest jump since February 2006 and the 14th consecutive year-over-year increase, according to CoreLogic Inc.
That’s helping more Americans feel optimistic about their futures, with the Conference Board’s consumer-confidence index climbing to a five- year high last month.
Asking prices in vacation areas have advanced more slowly. On a per-square-foot basis, May median prices in primary markets jumped 7 percent from a year earlier, compared with a 1 percent increase in areas where at least a quarter of properties were seasonally occupied, according to Trulia Inc.
List prices were up 1.6 percent in the Hamptons on New York’s Long Island, 1.4 percent in Dewey Beach in Delaware, and 8.9 percent in the Big Bear Lake and Lake Arrowhead areas near Los Angeles, the housing-data company said.
A vacation home is not most people’s first purchase as we emerge from a recession, said Jed Kolko, chief economist of San Francisco-based Trulia. But if the recovery continues we could see the price increases accelerate.
Second-home sales climbed 11 percent last year to 553,000, according to a survey by the National Association of Realtors. That compares with the peak of 1.07 million in 2006.
There will be a meaningful upward movement in vacation-home transactions this year and into 2013, Lawrence Yun, chief economist for the Realtors group, said June 7 at the National Association of Real Estate Editors conference in Atlanta.
Foreclosures in the first quarter dropped 39 percent to 542 compared with the same period in 2010, according to RealtyTrac, an Irvine, Calif.-based data provider.
The Tyrees’ agent, Lea Allen, has been selling in the market for more than 2 1/2 decades and said it’s the busiest she’s been in years.
Her annual income plunged from about $100,000 in the worst year of the housing boom to about $30,000 in the leanest years of the crash, spurring her to start teaching yoga for additional income.
She earned $60,000 in May alone.
It’s exciting – it feels like you have your job back, Allen said. I don’t have to teach yoga any more. I get to go and enjoy yoga.