To Buy, Or Not To Buy A Vacation Home Now?

An article from CNBC now circulating suggests this is the time to buy the vacation home you've always wanted. Why? Prices down... inventory up... interest rates low.

Nevertheless, those I've spoken to urge caution.

It's still difficult to get a second-home mortgage (CNBC's reporter agrees). Buyers must be ready to come up with a good chunk of cash-- at least 25 % in most cases, say experts.

Long-term trends positive?

CNBC quotes Walter Molony, spokesman for the National Association of Realtors, as saying that the market is“fundamentally healthy,” with a median price in 2007 of $195,000. He argues that while middle-age, middle-income folks -- i.e. baby boomers, are the main buyers now, Gen X and Gen Y (younger people) will come into the market right after them and will "fuel" the demand.

But you need to ask yourself how quickly those 20-to-45 year olds will recover from the current economic crisis. The older ones among them typically would be in their prime earning years. Instead, many are collecting unemployment insurance and more are sure to be in the same hole soon.

As CNBC concludes, buy for enjoyment first and investment value later. And "first-hand knowledge of the market will also help you avoid buying into a community that’s on the outs."

Trump in Trouble in Mexico and Las Vegas

The Donald is in the dumps. One Trump development project in Baja California, Mexico has gone belly up. Investors there who paid up to $150,000 to reserve a condo in a condo hotel there that was using his rightfully licensed name have been told that there's no way to get their money back. The local developer, PB Impulsores, has not built anything yet. Trump has told the angry buyers that because he is not the developer, he's not liable.

Meanwhile, a joint project -- Trump International Hotel & Tower Las Vegas-- involving Trump and casino tycoon Phil Ruffin is foundering. Word is that the three-quarters of the buyers of its condo hotel rooms have failed to close on their deals. That leaves the project $200 million short in paying off the its construction loan, which comes due this summer, according to the Wall Street Journal.

Utah's Zermatt -- Gemutlich Whole Ownership Resort near Deer Valley at Fraction of Cost

On a Utah ski trip last week, I was introduced to Zermatt. Nope, I was not teleported magically to Switzerland. Zermatt is a 2 1/2 year old, 4-diamond, full-service ersatz Alps resort with 150 hotel rooms and spa plus 2-BR condos and 24 townhomes (minimum of 3 BR each) on the other side of the Deer Valley ski area. It is only an hour from the Salt Lake City airport but a world away from Park City/Deer Valley in terms of mood, people and prices.

Located in Midway, Utah, Zermatt has a lederhosen look and an apple-cheeked, eager-to-please staff. Lift a phone and the switchboard operator says: "Guten tag!" The atmosphere is centuries removed from the sophisticated, contemporary chic of its neighbors over the mountain (although it must be said that the Deer Valley and Park City work force is typically just as courteous.)

However, while Zermatt is only a 15-minute drive from Deer Valley's Jordanelle gondola, it is not in Deer Valley. Thus real estate is seriously cheaper. Broker Drew Fuller, son of Zermatt's developer, told me resales of "studio" hotel room condos are available for $175,000.

As is true everywhere, sales are suffering from the awful economy, with a few short sales of 2-BR villas in the low $300,000 range, said Fuller. There are 1800+ square-foot townhomes available in the mid-$600,000 range. In Deer Valley, that price tag on that kind of space could be for fractionals, not whole-ownership units.

Zermatt owners who are in financial difficulty are "trying to get the banks to work with them," Fuller said. He is nevertheless hopeful that "this is a property that will rebound very quickly" once the economy starts to climb out of cellar, whenever that may be.

Zermatt's high seasons actually are spring/summer/fall, especially for Utahans, and it is big on conventions and meetings. All in all, it offers an intriguing alternative to Park City/Deer Valley glitter.