In my latest newsletter, Home On The Course, I speculated that the market for golf community homes was changing rapidly, and that the pandemic’s effects on real estate could last well beyond the end of the contagion. Millions of workers will never return to their offices now that their employers have found they are more productive at home; those companies will be turning out the lights in many of their offices and saving millions of dollars on leases and other utility costs. To top it off, their employees love working from home, able to commute from bedroom to home office, saving them hours a day in travel time and expenses. And what company doesn’t benefit from satisfied employees?
I asked my readers, most of whom are retirees or near retirement, to imagine when they were 30, living in some cold spot in the North, and their employees gave them the freedom to work from home. Would they stay in place or consider a relocation to the Sunbelt where they could play golf year-round, buy a home substantially bigger or less expensive – or, likely, both – than their current home, and save 25 percent or more on their costs of living?
It was a rhetorical question but apparently many millennials and other pre-retirees have answered resoundingly by rushing to purchase vacation homes. According to a study by Zonda, the real estate consulting company, that was recently published in BuilderOnline.com, the average median age of a vacation home buyer in the U.S. before Covid was 58; today it is 50. Families with children at home accounted for 30 percent of vacation home purchases before the pandemic; today that number is 45 percent. In short, the last wave of Baby Boomers and those a generation behind are competing with already retired Boomers for some of the prized vacation communities. That is putting additional pressure on inventories of primary homes in weather friendly areas. As simple economics teaches us, when demand goes up and supply evaporates, prices rise – in the case of vacation homes in the highest quality communities, as much as 30 percent and more over the last year.
10th tee at the Williston Golf Club, Williston, VT, a few miles from the university town of Burlington.
Strategies to deal with this sea change in the real estate market are limited and pretty obvious:
First, you can just accept that you will pay more for the retirement home you have always wanted. Second, and related, is that you can prepare for a smaller, less elaborate home. You can still have the golf course(s) within the gates of your new community, but the home you choose will be more modest than the one you had your heart set on. Third, you can buy a lot – they are still reasonably priced – and build a home to your specs; but expect the costs per square foot to be considerably higher than you might imagine, given a shortage of construction labor and the still-inflated price of building materials, especially lumber. Fourth, you can stay where you are, in a home and area you know well, and travel to warm weather spots for part or all winter. (If you can afford homes in two places, more power to you; it is probably the best solution if you can afford it.) And, fifth, reverse your dreams of a warm weather retirement, buy a new winter wardrobe, learn how to ski (if you don’t know already) and buy a home in a place like New Hampshire (no state income tax) or Vermont (great craft breweries, great overall lifestyle, and the best performance of any state on Covid). The golf is fine, albeit for five to six months a year, and the summers are glorious. And Vermont’s transportation department certainly knows how to plow its roads quickly in the winter, making it easier to get to some great restaurants, some fabulous skiing and all those craft breweries.
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