Homes More Affordable in 2007 Sales Still Historically High

Sales in nearly every market in 2006 were below 2005's record setting pace (in some cases far below). Taking the long view, David Lereah, chief economist with the National Association of REALTORS (NAR), observes that the market "appears to be stabilizing, and comparisons with an unsustainable boom mask the fact that home sales remain historically high -- they'll stay that way through 2007... and the number for this year will be the third highest on record." Lereah has characterized the 2006 slowdown as "a temporary correction". He is not alone in this view. A variety of factors have contributed to the emergence of a measured degree of optimism among market analysts about the prospects for real estate market stabilization in 2007. One of the primary factors, as seen by many analysts, is the trend toward lower interest rates after a series of rate increases in 2005. Another important change involves the attitude of sellers, many of whom appear to have adjusted to the downturn by setting more realistic prices when they put their homes on the market.

Alaska, New Mexico, Vermont and many states in the South (excluding Florida) are still seeing rising home prices. States that experienced the greatest increases in home prices in recent years are experiencing significantly lower sales, such as Arizona, California, Florida, Nevada and Virginia.

The shift in many markets toward a buyer's market has created many new opportunities for those seeking seasonal homes or places to spend their post-retirement years. Here are some small communities that are emerging vacation getaways where you might well find your ideal property at a reasonable price that could offer a greater degree of investment security than more traditional second home markets.

South Padre Island, Texas: Best known for its beaches on the Gulf of Mexico, South Padre Island is also a popular year-round vacation destination. It's usually uncrowded beaches and relatively low housing prices attract snowbirds from the mid-west and northeast. Despite the island's high profile reputation as a Spring break destination, many local businesses cater to a family clientele year round.

On this barrier island with about 2,500 year round residents, no property is far from the beach. Waterfront properties, especially condominiums, both on the beach and on Laguna Madre Bay, are in high demand. Beachfront homes can command over $1 million. Lynne Tate,, describes the profile of those who frequent the island as 'Winter Texans', families and Spring breakers. "There are a lot of second homes here, including a great selection of condos, starting at around $350,000, as well as single-family detached homes, some on the Gulf and others on the Bay. Interior lots start at around $200,000." says Tate.

One factor limiting price growth is the island's distance from a major city. It's a 300-mile trip to San Antonio and Houston is nearly 400 miles distant. The nearest airport is 45 miles away in Harlingen, Texas. These distances have not impeded the many Texas residents who have sought vacation homes on the island to enjoy the sun, sand and steady Gulf breezes.

Cloudcroft, New Mexico: High mountain meadows and a cool, dry climate are hallmarks of Cloudcroft, New Mexico, a small town of 750 nestled at 9,000 feet near the crest of the Sacramento Mountains. The village sits high enough that area views include looking down at clouds rolling in from the surrounding lowland desert. Cloudcroft is a quiet, relaxing and scenic village with year round activities. Surrounded by Lincoln National Forest and with nearby ski mountains, the area offers a wide variety of outdoor activities, including fishing, hunting, hiking, mountain biking, Alpine and cross country skiing, and horseback riding. Until recently, area housing prices have been held in check by the area's low profile.

Jalene Jones, of Diamond J Real Estate., says, "Cloudcroft is truly a Village - no fast food outlets or chain stores. We live a slower paced life with little traffic. The Village is approximately one square mile in size, completely surrounded by the Lincoln National Forest so fifty years from now we will still be The Village of Cloudcroft."

Helen, Georgia: Located In foothills of Blue Ridge Mountains on the Chattahoochee River, Helen is an unusual place. It recreates European alpine village -- complete with cobblestone streets. The town, 1.5 hours from Atlanta, gets two to three million visitors a year. Surrounded by forest land, the region is popular for hiking, river tubing, canoeing, fishing, mountain biking, horseback riding and golf. Several lakes are within an easy drive of town. Given its relative accessibility, the area has been somewhat slow to develop and hasn't attracted real-estate speculators. It has, however, attracted seasonal homebuyers looking for homes in reasonably priced small mountain communities.

Ed Sanders, of Up Country Realty in Helen,, maintains that presently, "Most of our buyers come from Florida and other parts of Georgia." Many of these clients are seeking a nearby mountain community to escape the hustle and bustle and Summer heat of places like Atlanta, and crowded Florida coastal cities.

Bath - Beaufort County, North Carolina: North Carolina's Outer Banks are better known, but it is on the so-called Inner Banks where you will find a hidden gem. Bath is a quiet harbor village North Carolina's oldest town, founded in 1705. Abundant nearby waterways, include the Pamlico River and the Intracoastal Waterway (Pungo River) offering great opportunities for boating, birding, and fishing. The more expensive properties in the area ($500,000+) afford views of multiple rivers. Other homes that front on smaller creeks can be found starting at around $300,000. The area has a rural feel, with much land having belonged to farm families. Some of the pastoral landscape is giving way to upscale development, as the area begins to be discovered.

According to Alma Evett, of The Rich Company, Bath Branch Office,, "Beaufort County has the most shoreline of any county in North Carolina [of which there are one hundred]. It has rivers that are more like bays and creeks that some would call rivers." Ample opportunities to find reasonably priced waterfront properties is a draw for many prospective seasonal homebuyers here, "We are still considered an affordable market, when compared with other areas. Waterfront lots range from $200,000 to $500,000. Comfortable waterfront homes range from $600,000 to $1.4 million. Reasonable prices, very little traffic, and a laidback atmosphere add to the allure of the Bath area," says Evett.

Winter Park, Colorado: Located at over 9,000 feet up in the Rocky Mountains, with a population of under 700 year round residents, Winter Park has made a successful transition from being "Denver's ski area" to an attractive destination resort.

Penny Hamilton, of Forest and Lake Real Estate in Grand County, Colorado describes the area as "a perfect synergy of natural beauty, fresh air and outdoor action. And Winter Park is only a short 65 miles from Denver."

The Denver Post recently described Grand County and the amenities surrounding Winter Park as 'one of America's last great places'. As befits a year round resort, a wide variety of activities are available in the area, from skiing to snowcat tours, mountain biking to Alpine slides, and everything in between. You'll also find a great selection of restaurants, shops, and entertainment venues in the area.

According to Hamilton, "Grand County is blessed to have a wide range of real estate prices. Because the area is still developing, prices are more affordable than many other four-season mountain resort communities."
The 2006 market slowdown offers some lessons for those in the market for a vacation home. Beware of speculative buying in hot markets. Look closely at local market factors which could potentially affect resale price, like the job market for example. Purchasing a home in an area that is primarily or exclusively a second home market can be a greater risk in terms of price reversals like those seen in 2006.

In many locales across the U.S., market news is positive. There are still a number of relatively unknown places in the U.S.--small towns where one can find great vacation or retirement spots, a good employment outlook, and moderate but steady price appreciation. This is a formula that offers better long-term security for those to whom possible resale value is an important factor.

So, if news of "bursting bubbles" and "flattening markets" has you hesitating on a real estate investment, remember, in a buyer's market, you might find that the vacation home you've always wanted might well be more affordable in 2007!

About the Author

2nd home Journal is a highly successful quarterly digital magazine for owners and prospective buyers and sellers of vacation, residential, investment and resort properties in the US and abroad.

2nd home Journal's powerful web site, is the first choice for anyone searching for a second home.