Leisure Living: Prices holding up in ski areas

Ski season’s coming, and with it the traditional flurry of sales in second-home markets in mountain resort towns in the West.

Locals are hoping this season reverses the downhill slide in sales caused by the national housing recession and tight credit markets, which mean even higher interest rates for buyers who don’t use a home year-round.

Sales in several Rocky Mountain resort towns are down 40 percent year-over-year. Prices, however, appear to be leveling out, or in some cases going up, a sign that investments in these areas tend to hold their value.

While the government bailout passed by the House and signed by President Bush on Friday doesn’t specifically address second homes, many are hoping it will help the mortgage market and restore buyers’ confidence.

In its October/November issue, Robb Report’s Vacation Homes magazine features Aspen, Colo., and Coeur D’Alene, Idaho as two of the top 10 places to buy a second home, citing strong prices and steady economies.

These cities, along with well-known destinations such as Vail, Park City and Jackson, Wy., are attractive because they are smaller towns with lifestyle options that include skiing, hiking, and other recreational activities. But these pluses, and a relative scarcity of developable land, can drive prices above $1 million.

In Jackson, the average home sold in the first half of the year was a cool $2.1 million, up from about $1.95 million during the same time period last year, according to Jackson’s multiple listing service. However, sales totaled 166 through June, down from 294 in the same period last year.

Park City, Utah, saw home sales drop to 675 from 1,166 in the first half of 2007, while the average sales price increased slightly from $1.10 million to $1.25 million, according to that city’s MLS.

Vail, Colo., and Sun Valley, Idaho saw similar price gains and sales declines.

Those prices are being pulled up by sales at the Robin Leach, rich-and-famous end of the market — which isn’t affected by the mortgage morass because buyers usually pay cash. Homes like President Gerald Ford’s ski retreat in Vail, for example, which is on the market for $14.9 million.

Prices in these areas are also protected because the topography and scarcity of developable land restricts new construction.

Overall, demand for second homes is buoyed by demographics, including the more than 70 million baby boomers who are approaching retirement age. Despite recent economic concerns, baby boomers generally have acquired wealth in home equity and savings accounts and are entering the second home market. The typical age of second home buyers has gone down, and now stands near the mid-40s or early 50s, experts say.

In 2007, second homes made up about a third of new and existing home sales, according to the National Association of Realtors. The NAR said 21 percent as investment homes and 12 percent used as vacation homes. The numbers were down from 22 percent and 14 percent, respectively, in 2006 as consumers held back on big-ticket, discretionary purchases due to economic concerns and tightening of mortgage credit, the NAR said.