Are California Vacation Homes a Good Buy Now? You Decide.

California might be a great place to pick up a vacation home right now, declares real estate commentator Broderick Perkins. He notes that the California Association of Realtors reported this fall that the median price of housing in key coastal and tourist areas was way way down -- down "50 percent to nearly 60 percent in the Monterey and Monterey County regions; down 30 to 50 percent in Santa Barbara regions; down more than 42 percent in Palm Springs; down 35 percent in Los Angeles; down 33 percent in San Diego and the Wine Country; down 32 percent in Santa Cruz; and down 29 percent in San Francisco Bay Area." Then he quotes others, such as Christine Karpinski, director of Owner Community for HomeAway.com, as arguing that buyers with cash who can buy and then rent out a vacation home can make it a nice investment. However, these owners should be able to pay the monthly mortgage with enough rental weeks to eke out a profit.

Renting Out for 17 Weeks Yearly Pays for Your Vacation Home

"According to government data, close to 40%, and perhaps as many as 50%, of the foreclosures in 2007 were of nonowner-occupied homes, which generally means vacation homes,"says Standard and Poors The Outlook. S&P Chief Economist David Wyss "expects this trend to continue into 2008 and 2009, pointing out that it's psychologically easier for people to skip payments on a secondary home, whereas they will scrimp and save in other ways in order to hold on to their primary home." But the article also quotes second-home expert Christine Karpinski as pointing out: "If you have a mortgage on your second home, renting it out only 17 weeks will cover your mortgage payments for an entire year ....If it's paid for free and clear, only five off-week rentals will cover costs like bills for your phone, power, cable, and association dues."