Bargain hunting in desert, mountains
People flush with cash are seizing opportunity to buy vacation homes
08:53 PM PST on Saturday, February 13, 2010
By LESLIE BERKMAN
First-time buyers with limited funds aren’t the only ones looking for deals in the depressed Inland Southern California real estate market. People confident of their incomes and flush with cash are seizing the opportunity to buy vacation homes in the desert and mountain resorts that they hope will become a profitable investment or a dream retirement. They are buying homes put on the market by owners with declining family incomes and investments who no longer can afford to maintain a second or third mortgage or want to do some belt-tightening.
In some cases, baby boomers in their 60s with shrunken assets are selling mountain vacation homes where they had hoped to retire. “We have had a lot of heartbreaking calls,” said Bob Angilella, a leading Re/Max agent in Big Bear. Angilella said he has seen such homes purchased in turn by younger boomers, 50 to 55, who are still working, can make a 25 to 30 percent down payment and are eager to buy real estate that looks like a bargain compared to prices of a few years ago. ”The market has created some great opportunities,” said Jack Syage, a businessman from Huntington Beach who is looking to buy a vacation house in Lake Arrowhead.
Syage, 55, said he figures real estate prices in Lake Arrowhead could fall another 10 percent to 20 percent but he still believes the values are attractive. He said he had made an offer of nearly $400,000 on a modern three-bedroom home where he and his wife, their college-age children and friends could go to hike, bike, snowboard and enjoy the woods. If the offer on the house is accepted, he said, “We would probably keep it forever.”
Bob Bailey, a broker associate at Coldwell Banker Skyridge Realty in Lake Arrowhead, said after sales there plummeted in 2008 they rebounded 16 percent last year, with the largest part of the upturn in the fourth quarter. Unlike residential areas farther to the west in Riverside and San Bernardino counties, Arrowhead is not dominated by foreclosures, he said.
The median home price in Arrowhead has dropped 32 percent to $325,000 from a peak of $480,000 in 2006, said Bailey. He said most buyers come from Southern California coastal cities looking for weekend getaways. Because of tightened lending standards, they must be well qualified. “You don’t put a deal together without 20 percent down and a credit report that you can read with gentle background music,” he quipped.
Tyler Wood, a Coldwell Banker real estate agent in Big Bear Valley, said while only about 20 percent of the homes for sale in Big Bear are bank-owned or offered as short sales, such distressed properties represent about half of home purchases because buyers are intent on getting deals. He said the number of available houses is shrinking, with the result that multiple offers are common.
Vacation home buyers in the desert also demand bargains, said Chris Gilfillen, a real estate agent who specializes in selling houses priced at $1 million and more in La Quinta and Rancho Mirage. “They feel totally empowered and feel if someone isn’t basically punished they didn’t cut a good enough deal,” he said. Many home hunters in the desert are from cold winter states and Canadians attracted not only by low prices but by a favorable monetary exchange rate.
“It is the middle of the high (home selling) season and we are seeing a lot of energy in the market,” said David Banks, a real estate agent with Windermere Real Estate in the Coachella Valley. “Those Canadian dollars are flexing their strength in the desert.”
Claudine Messika, a Keller Williams agent in the desert who specializes in international clients, said many of her Canadian customers thought the desert housing market had crashed and are surprised to find that in country club communities prices have sunk only 20 percent to 35 percent, compared to a drop of 60 percent in less desirable areas. She said they still buy on the premise that “prices are as good as they will get.”
Don Hanson, a retired computer systems analyst, and his wife Della, were taking a break from the winter in Saskatchewan and shopping for a vacation home in Palm Springs.
Hanson said for many months the couple had been monitoring the downturn in the U.S. real estate market. He said they had decided that although home prices had fallen more in other parts of the country, they preferred Palm Springs. Sharon and Richard Burns, of Juneau, Alaska, were vacationing last week in a three-bedroom house they bought in August in Palm Springs. Sharon Burns said the couple, who run a small radio network in southeastern Alaska, wanted a place in the sun on an Alaska Airlines flight route and where friends from their native Australia can visit. In addition, she said, “It seemed like a good time to take advantage of the real estate market. I think there is an opportunity to invest and make a capital gain down the track when the market recovers.” Buyers also said despite the economic downturn, they were confident in the health of their personal finances.
Stanley Gilford, 78, of Los Angeles said his home health care business is doing well and that is one reason why he is in escrow to pay $545,000 for a vacation house in Rancho Mirage with mountain views and a pool at the edge of a lake. “I am feeling pretty good. Maybe a little gift for myself and my wife is OK,” he said.