Remember that famous speech in the movie "Wall Street" in which the oily slick Gordon Gecko proclaimed that "Greed is good?" Well, maybe greed is good on the street called Wall, given the incredible compensation packages of the last few years, but certainly not among those late to the game of "flipping" real estate in places like Miami and Las Vegas. There, greed kills.
According to a National Association of Realtors report a few days ago, investment home sales fell almost 29% compared with 2005 figures. Vacation home sales, on the other hand, hit a record last year, up 4.7%.
People are not stupid, and most are not greedy. They understand that, the housing bubble notwithstanding, a house is first and foremost shelter, and secondarily an investment. And chances are that if you buy a vacation home in a place you have researched and that offers all the activities and other benefits you and your family want, then others will find it attractive when it comes time for you to sell. Even if you aren't prepared to sell your primary home up north, using some cash to buy property in a growing market in the south -- and using the property for vacations -- might make sense for those who can afford to do so.
Areas of the southeast we have visited recently are not in a market funk (obviously we haven't been to Miami or Orlando). Prices in the Carolinas, Virginia and Georgia, for example, are holding pretty steady. But a number of metro areas in the north are suffering price depreciations. People contemplating retirement from north to south face a quandary: Do they wait for the housing market to snap back and provide them with what they think is the true value of their homes, or do they get the best price they can now? (This all assumes they are ready to move).
The numbers say sell and move now, if you can. According to Money magazine's website, people who own property in the Nassau/Suffolk County area of Long Island, NY, where median home prices are around $483,000, are likely to see the value of their homes decrease by about 6%. Yet prices in popular areas in North Carolina, for example, like Greensboro and Charlotte, are forecast to increase around 2% over the next 12 months. Factor in the relatively lower cost of living in the Carolinas compared with some high-tax states in the north, and the spread of 8 points above looks even wider.
We understand that people do have emotional ties to homes they have lived in, raised kids in and invested in over the years. It will be difficult for my wife and me to leave our home in Connecticut in just a few years when both kids are off to college and we don't need a five-bedroom house for two people. We hope at that time that we don't try to wring every last dollar from the sale of the house, especially since we intend to build one in a faster appreciating market in the south. Waiting would be fool's gold.
A list of forecasts and housing information for 100 cities can be found at cnn.money.com.
