McbeeLanning50
From Nema Wiki
Resort Real Estate - Why Its Prices Behave Differently
Luxury Resort Real Estate
What is resort property? It can be defined as property situated in a community that thrives on tourism and where ownership of second or third homes make up a considerable percentage of the general home ownership.
Aspen real estate is really a prime illustration of an extravagance resort market. Aspen is home to four exceptional ski mountains with a lively winter tourism industry and summers offer mild temperatures to savor the plentiful outdoors. The majority of homes owned within the Aspen or Snowmass market are second homes. The normal vacation home in the Roaring Fork Valley is required less than Thirty days per year on average.
Average single-family homes in Aspen start at about $5 million, Snowmass homes come in a little lower around $3.5 million normally. So it is clear that property within this mountain resort grouped into the luxury homes category. However the Colorado Mountains and it is ski resort towns like Vail, Beaver Creek and Breckenridge are by no means the only real resorts with a luxury designation. Resort towns span coast to coast. From the Florida Keys or even the Carolina cost line to the mountains of Utah and California.
One thing each one of these resorts share is the fact that their real estate markets are not following a same rules as suburbia.
Property Finances
1) People who are able to afford to purchase second homes must by definition be somewhat successful to get to that stage. It seems therefore less likely that they would fall for obscure financing products.
2) Lending criteria on second homes are and also have been tighter than for primary residences. It is not uncommon for lenders to ask 20% down on these kinds of deals. It is therefore harder to obtain inverted on your mortgage.
3) In luxury resorts like Aspen or Snowmass 60%-70% of all property transactions are cash transactions. No financing involved. Negative income is therefore not an issue during these situations.
4) Rental income from properties not used for most of the year can soften the negative income if a mortgage is involved.
Real Estate Desirability and Liquidity
1) Resorts obviously are something. They have something which people desire. This may be mountains, lakes, the ocean, a special climate or island setting. Really anything, but it must be special.
2) Resort real estate is really a luxury good. It is not essential to own. Therefore makes it easier for individuals to divest of luxury property holdings. Properties owned most of the desirable luxury destinations are a more liquid asset. The security that properties tend to be more fungible helps property owners divest of them more quickly if necessary.
3) In most cases resorts offer limited availability. Associated with pension transfer things desirable they are not obtainable in unlimited quantities. There is only so much land inside a mountain valley and there is only that much beachfront property, there are only a lot of skiable mountains, you get the drift.
Overall it may be said that resort second homes would be the first asset that'll be sold when people have been in financial distress. However it's less likely that owners of resort property like Aspen property would have overextended themselves to begin with. This combined with the tighter lending criteria for second homes makes it less likely that the general mortgage troubles spell to the second home market. As long as the economy only experiences an average downturn the posh property segment could possibly profit. It is not uncommon to find a re-allocation of wealth from bonds and stocks into property in times of uncertainties. Therefore the top quality from the market will weather the storms much better than most people expect.
