NAR Spin on Second Home Sales Drop

In case you've been taking a very long siesta, you already know that second home sales -- like all other real estate transactions -- have fallen sharply in the past year. Below is how the National Association of Realtors spinned the details:

WASHINGTON, March 28, 2008 -
The combined total of vacation- and investment-home sales declined with the overall market in 2007, but still accounted for 33 percent of all existing- and new-home sales, which is close to historic norms, according to the National Association of Realtors®.

The market share of homes purchased for investment last year was 21 percent, down from 22 percent in 2006, while another 12 percent were vacation homes, compared with a 14 percent market share in 2006. The total share of second homes declined from 36 percent of transactions in 2006.

NAR’s annual Investment and Vacation Home Buyers Survey shows vacation-home sales dropped 30.6 percent to 740,000 in 2007 from a record 1.07 million in 2006, while investment-home sales fell 18.1 percent to 1.35 million last year from 1.65 million in 2006. At the same time, primary residence sales declined 10.0 percent to 4.34 million in 2007 from 4.82 million in 2006.

Drop Price in Slow Real Estate Market? Yes!

A lesson from New Jersey -- bidding wars can erupt on a vacation home when you drop your price low enough.

Too many folks can't bear the thought of lowering their asking price. But a seller in Tenafly, NJ did. After a house did not sell for many months at $810,000, she told her broker to lower the price progressively. When it reached what she called "the sweet spot," $699,000, she suddenly got multiple offers, she told the Bergen Record.

Her broker was then able to set a deadline for best bids and got an extra $6,000 on the sale. Point of story? " it's about value....It's not affordability," according to the agent. It was not a vacation home, but idea is still valid in today's slowing environment.

New "Luxury Tax" on Vacation Homes?

Beware Congress's plans for helping homeowners in foreclosure.

The House Ways and Means Committee last week approved what amounts to a hike on the sale of vacation homes. A section of the foreclosure relief bill would "make it harder for people who sell their second homes to exclude as much as $500,000 in profit from capital-gains taxes," Bloomberg News reported. The Democrats inserted it as a way to raise $2 billion in additional taxes that would be needed to offset measures designed to protect "mortgage borrowers from taxes on debt forgiven in a foreclosure." Rep. Sam Johnson (R. Texas) dubbed it "a luxury tax on retirement homes'' that will hurt coastal areas, mountain states and resort areas.

Of course, the foreclosure relief bill must still be passed by the full House and Senate before it becomes law.

Vacation Homes Still Hot in Rockies, Southwest

My recent trip to Aspen, Snowmass and Santa Fe showed that these second-home and vacation-home hotbeds are still going strong, although maybe not strong enough to suit some real estate agents. In Aspen, Snowmass and Vail, huge cranes signify ongoing big construction projects-- new homes, new condos, new fractionals. In Crested Butte, a smaller Colorado ski town, sales have slowed while new buildings abound. In Santa Fe, the action has also slowed down but that means you might have a little wiggle-room in making an offering on a house you crave. My recommendations: talk to top brokers such as BJ Adams in Snowmass and Aspen, Red Lady in Crested Butte, Barker in Santa Fe about their listings.