After a few slow years, some signs of a potential revival in the second-home market are now blooming in the Bay State’s vacation areas.
Data provided by The Warren Group, publisher of Banker & Tradesman, shows single-family sales for the first two months of the year have more than doubled in Martha’s Vineyard and Nantucket compared to the same time last year. Overall sales for Berkshire and Barnstable counties are less rosy – single-family sales for the first two months of the year were up 4 percent in the former and flat in the later – but higher-end sales were brighter, with million-plus sales up 23.4 percent on the Cape in 2013 and up 47 percent in the Berkshires.
Many agents feel that the rough winter dampened buyer interest at the beginning of the year. But after a slow start to the beginning of the year, agents on the Cape are now seeing a burst of enthusiasm from second-home purchasers, said Paul Grover, co-broker/owner of Robert Paul properties.
“We’re seeing pockets where it’s been really strong the past couple of weeks. Falmouth has been really strong, Eastham has been really strong. Seabury, in the town of Mashpee, there’s been some good second home activity in the $1 to $2 million range,” said Grover.
That’s in line with national trends. A recent survey by the National Association of Realtors (NAR), covering existing and new-home transactions in 2013, shows vacation-home sales jumped 29.7 percent to an estimated 717,000 last year from 553,000 in 2012.
Based on its survey of buyers, NAR expects further improvement in the vacation-home market this year. “Growth in the equity markets has greatly benefited high-net-worth households, thereby providing the wherewithal and confidence to purchase recreational property,” explained NAR Chief Economist Lawrence Yun.
There’s still plenty of room to grow: vacation-home sales are still about one-third below the peak activity seen in 2006. They accounted for 13 percent of all transactions last year, the highest market share since 2006, while the portion of investment sales fell to 20 percent in 2013 from 24 percent in 2012.
That could help keep the proportion of cash purchases, which had been on the decline, high. All-cash purchases remained fairly common in the investment and vacation-home market: 46 percent of investment buyers paid cash in 2013, as did 38 percent of vacation-home buyers.
Uneven Growth
In Massachusetts, the gains haven’t been spread entirely evenly. The upper Cape, which often draws Boston-area buyers, has seen a surge in activity, while the lower Cape, which often draws more second-home purchasers from New York, New Jersey and Connecticut, has been slower, said Dick Eble, an executive with Kinlin Grover Real Estate in Orleans.
In 2012, “we went crazy, down this end. Last year, this market was off 18 percent, while the Cape as a whole was up, because of increases in Falmouth,” he explained.
“Whether it’s the $1 to $2 million range, or the $5 million and up range, we’re still seeing mostly activity from the Boston area,” agreed Grover.
Despite the tough winter slowing the market at the beginning of the year, Cape agents still think the spring market will prove resilient. While in the past the second-home market was often offset from the primary residential market, with more transactions occurring in the fall and winter so that people could take advantage of their new getaway in the summer, agents say that in recent years they’re seeing more second-home buyers out looking in the spring.
“At the beginning of the year we saw a lot of activity, but not deciding. A lot of people were kicking the can down the road,” said Eble. But “in the past two weeks we’ve taken a number of offers.”
“For us, it just delays it. Instead of [closings] in March, April, May, we’re spreading them out, even to early June,” said Grover. “Absolutely, that’s what we have seen."
Email: csullivan@thewarrengroup.com
