Buying a vacation home

If you've long dreamt of owning a beach house, country cottage or other second home to while away your leisure time, stop dreaming. With family incomes up, mortgage rates down and resort-real-estate prices depressed because of worries about possible changes in the tax treatment of vacation get-aways, this may be the best time in years to hang out that "Home Sweet Second Home" sign on your new vacation home.

Contrary to the popular image of a second home as a luxury that only the rich can afford, a weekend or vacation retreat in the U.S. is within financial reach of many middle-class families. There are about 8.2 million second-home owners in this country, the National Association of Home Builders reports. According to a study by the Scott Company, a Kiawah Island, S.C., management consultant, the average value of all types of second homes nationwide is $125,500.

A lot of credit for the current buyer's market in second homes -- inadvertent though it might be -- goes to the Bush administration and its drive to simplify the tax code. Prices in many resort areas fell 10 to 20 percent after the White House proposed a limit on the deduction for mortgage interest paid on second dwellings. While there is no such cap in the only tax-reform bill approved thus far -- the one passed by the House of Representatives -- most resort prices have not recovered fully. The reappearance of single-digit mortgage rates have further widened the window of opportunity for buyers.

Also, the weaker dollar and the fear of terrorist attacks are deterring Americans from traveling abroad, making the purchase of a vacation home a more appealing option.

Location, always a key factor in the way real estate is priced, can count for even more when it comes to vacation homes.

Experts say that the soundest investments in second homes are in the Texas Gulf Coast and Rural properties close to Houston where the supply of housing is limited. New golf courses and lagoons will always ready to be created. Anything that's near something man-made has a lesser potential for appreciation than anything that is close to a God-given feature.

Access to recreational facilities is another consideration in how resort homes are priced. Many developments are jammed with extras such as golf courses, tennis courts, swimming pools, hot tubs and health clubs.

Shopping for a vacation home in many ways is no different from buying a principal residence. In either case, it's important to check the reputation of the builder and to price comparable homes. If you're buying a condominium, it's crucial to scrutinize the condo association's operating budget. There should be funds set aside for capital repairs, for instance. Some condo owners may scrimp on improvements, figuring they will have unloaded their units before a structural problem -- say a leaky roof -- becomes evident.

Since access to recreation rather than shelter is the main reason that many people buy vacation homes, keep in mind that factors such as the size of bedrooms may not be as important as they are in your primary residence.

Be sure to examine construction for both its quality and its suitability to the site. Ocean homes should be built of wood. They will weather beach conditions much better than brick houses.

Find out the zoning regulations in the area of your prospective second home. If you are buying a retreat for its bucolic setting, you don't want someone building a megamall or a 40-story office building nearby. Also, if you want to renovate or expand someday, you don't want to be limited by onerous restrictions.

In the end, the kind of vacation home and setting you want will be limited by what you can afford. But if the experts are right, the current combination of choice and price may not recur for quite a long time.

There is a lot of free information available to you about buying, selling or investing in real estate. For complete information about the real estate market including current homes for sale, property values and more please visit the most complete website online dedicated to everything  real estate. So please feel free to contact me with any of your mortgage questions and I will me more than glad to answer you queries. Call me on my cell at 713-960-1140 or email me at neal@nealsanford.com.