Best Places for Second Homes
By STEVEN M. SEARS AND MARK VEVERKA
Article from: Barrons.com
As prices of luxury homes rebound, we rank 15 stunning settings. A new No. 1
When Barron’s called the bottom of the market for expensive second homes just about a year ago, some folks wondered what kind of caviar we’d been eating.
Prices of high-end homes had sunk 20% from their 2007 peak, and vacation homes were doing even worse, with some markets off 40%. America’s mainstream housing scene was getting pounded by foreclosures, and anxious pundits were warning of a double-dip recession.
Not to put too fine a point on it, but we were right.
Home prices in moneyed enclaves from Beverly Hills to Aspen to Greenwich climbed more than 10% last year, according to data from realty brokers and other experts and conversations with local residents. Though the rebound has been lumpy, the general uptrend looks to be firmly in place.
Two years after the worst of the financial crisis, the rich have dusted themselves off and resumed some serious discretionary spending. Both sales volume and prices are clearly on the rise for luxury vacation homes, one of the greatest indulgences of all. Prices for the majority of the 15 locales in our annual ranking of best places for second homes climbed in 2010, sometimes dramatically.
In seeking out and ranking these havens, we looked for beauty, comfort, convenience, a range of lifestyles and — always the paramount criterion at Barron’s — value. We wanted prices that had clearly hit bottom and were either rising or ready to rise. When it comes to good value, our new No. 1, Sea Island, Ga., is an excellent case in point. Its prices plunged by a third last year as the resort’s parent company buckled from the weight of debt and filed for bankruptcy. But new owners, a group of heavy-hitting investors, are putting the 83-year-old idyll back on solid footing. That means that now could be the opportunity of a lifetime for buying into this resort island along Georgia’s coastline.
It’s breathtakingly beautiful — both the seaside landscape and the classically designed homes. And anyone with lingering concerns about the resort’s financials can take comfort in knowing that a pretty decent financial handyman lives just down the road — former Secretary of the Treasury Henry Paulson.
Across the board in luxury homes, sales and prices got an additional lift toward the end of last year, as political uncertainty eased and the Bush-era tax breaks were extended. “In three of our major recent sales, the buyers had properties under contracts last summer, then bailed out, but then came back,” says Brian Hazen, vice president of Mason Morse in Aspen.
The time may well have come for you to jump into the market. With that in mind, we went out and took the pulse of the very best places for second homes. For our notes from the field, please read on.
1. Sea Island, Ga.
Launched amid much fanfare in 1928, the Cloister Hotel on this coastal island survived the Great Depression and then spawned a vibrant resort community. The Great Recession, however, proved to be too much. After loading up on debt for an ambitious expansion, Sea Island Corp. filed for bankruptcy protection last summer and was rescued by a group of big investors, including Oaktree Capital, Starwood Capital, Avenue Capital and billionaire Philip Anschutz.
Sea Island is now ready to reclaim its old splendor and then some. It’s as beautiful as ever, surrounded by tranquil salt marshes and sweeping views of the ocean. The architecture includes some of Addison Mizner’s finest Mediterranean-style designs. As a homeowner, you gain access to the resort’s 65,000-square-foot spa, two championship golf courses, several fine yachts, acclaimed shooting school and five miles of private beaches.
You wouldn’t know any of that from the prices. They plunged by a third last year, even as the broader luxe housing market rebounded. But sales volume has picked up lately and prices are apt to follow.
Located midway between Jacksonville and Savannah, Sea Island already is something of a power alley. Residents include Don Keough, former president of Coca-Cola; software billionaire Tom Siebel and former Senator Sam Nunn. Former Treasury Secretary and Goldman Sachs chief Henry Paulson owns most of nearby Little St. Simons Island.
Median Home Price 2009: $3.3 million
Median Home Price 2010: $2.3 million
2. Maui, Hawaii
The price of paradise is about to go up. After two down years, sales are gaining strength in the serene and lovely towns of Wailea and Makena. Sales volumes in these adjacent locales rose 35% last year, and total dollar volume vaulted 135%. While the median home price is $1.7 million, the asking prices for the several oceanfront homes listed for sale in Wailea and Makena range from $5.7 million to $22 million. In all, there are 53 homes on the market. One of the best values is Makena Place, a gated community of just 10 homes on five acres at the ocean’s edge. You’ll get outstanding views of the Pacific Getting to truly sandy beaches requires a five-minute walk, so remember to pack the flip-flops.
Median 2009: $1.5 million
Median 2010: $1.7 million
3. Hamptons, N.Y.
The famed beaches, fine houses and exclusive restaurants of the Hamptons are all the more enjoyable if you can spring for a helicopter to get there. The flight from Wall Street is just 40 minutes, high above the epic traffic jams.
Plan on spending at least $10 million for a waterfront manse with a pool; small but serviceable inland homes can be had for $1 million. Realty firm Corcoran’s sales data suggest prices are steadying and sales are increasing. Some locals aren’t so sure and, as always, the market depends on Wall Street bonuses. Everyone does agree on this: The value of Hamptons property is unlikely to decrease over time, and it pays enormous dividends every summer.
Median 2009: $1.5 million
Median 2010: $1.6 million
4. Aspen, Colo.
If you’ve got $5 million or more, it’s nearly impossible to find a bad place to live in Aspen, where Victoria and David Beckham, Goldie Hawn and Kurt Russell, and many other such couples come to relax. Among the most exclusive digs are the 162 homes on Red Mountain, many of them ranch-size estates in a mosaic of uber-private subdevelopments.
With majestic views of Aspen Mountain and close proximity to the slopes, Red Mountain is the ski-town equivalent to beachfront property. For some, price is no object: A 21,477-square-foot home here on a mere 4.5 acres of land sold for $43 million in 2009. That said, the overall Aspen market is more affordable than during its peak in 2008. Don’t expect the deals to last for long: Red Mountain sales volumes doubled last year, and prices rose 14%.
Median 2009: $9.5 million
Median 2010: $10.8 million
5. Martha’s Vineyard, Mass.
Seven miles off the coast of Massachusetts, Martha’s Vineyard entered the popular imagination around 1993 when then-President Clinton and family vacationed at the home of his friend Vernon Jordan. President Obama has twice vacationed on the island since he took office. The vineyard is now a full-fledged international destination. Modest summer homes have been replaced by massive luxury manses, but local officials have wisely decreed that 2% of every real estate sale go to a land bank that buys up and preserves open spaces. You can’t go wrong buying into Chilmark or Edgartown. Chilmark prices:
Median 2009: $1.34 million
Median 2010: $1.35 million
6. Deer Valley, Utah
It couldn’t be easier to fly into this world-class ski haven. Abundant nonstop flights to Salt Lake City, which is less than an hour’s drive away, give the area a clear edge over other Rocky Mountain snow spots. Park City is the main commercial attraction, but the place to go for your hideaway is the gated community of Tuhaye. Built by Canadian-based Talisker, which developed much of Deer Valley and now owns the local Waldorf-Astoria hotel and Canyons ski resort, Tuhaye offers top-notch golf, great dining and the opportunity to custom-build the house of your dreams. Tuhaye prices:
2009 Median: No Sales
2010 Median: $1.3 million
7. Lake Tahoe, Calif.
Just a three- or four-hour drive from San Francisco, Tahoe has long been a favorite alpine retreat for Northern Californians. But it is about as fragmented — both in geography and demography — as any vacation area can get. The best place for a vacation home is Martis Camp in the northern reaches. It’s a five-year-old 2,177-acre master-planned development that has skiing, championship golf, a competition pool, fine dining and a great fishing hole. It will serve you well in summer, and even better in winter — an exclusive chair lift connects the village to the Northstar-at-Lake Tahoe slopes, offering rare ski-in/ski-out convenience. Twenty-five homes have been built, 54 are under construction and there will eventually be 653.
Median 2009: $1.9 million
Median 2010: $2.2 million
8. Kiawah Island, S.C.
This is a captivating barrier island off Charleston’s coast. It has 10 miles of beaches, five world-class golf courses, a spa, tennis and 4,100 homes stitched into the landscaping. Developers of gorgeous areas often succumb to the temptation of selling everything to the highest bidder, and cramming as many houses as possible onto the land, but Kiawah’s developers have protected the beauty of the place, creating a national treasure in the low country of South Carolina. Even when the national economy soured, and other luxury resorts were forced to sell property at discounted prices, Kiawah held firm and did not cut prices on any sites. In a clear sign of bullishness, the developers are now planning on bringing more land to market.
Median 2009: $1.2 million
Median 2010: $1.4 million
9. Palm Beach, Fla.
Palm Beach is part of the Iron Triangle of America’s high society: People live in New York, winter in Palm Beach and summer in the Hamptons. This pedigreed place — the Kennedys and the Vanderbilts had oceanfront homes here for decades — got its groove back in 2010, as residents recovered from the Bernie Madoff scandal and the ravages of the credit crisis.
Real estate — think red tile roofs, stucco the color of sand and beautiful archways — is firmly on the rebound. Recent sales on North Ocean Boulevard, which overlooks the Atlantic Ocean, include a $22.5 million classic Palm Beach manse with seven bedrooms and more than 10,000 square feet. The house you can see on page 14 was built on spec and is now listed for $84 million. When that one goes, Palm Beach will have fully returned to its glory days.
Median 2009: $2.6 million
Median 2010: $2.7 million
10. Pebble Beach, Calif.
Hell has frozen over, and Pebble Beach will never be the same. To nearly everyone’s surprise, funny man and amateur linkster Bill Murray recently won the legendary pro-am golf tournament at America’s most famous links. But Pebble Beach is no Caddyshack. In addition to the namesake golf course, Pebble is a community of some 2,500 high-end homes. tucked in the Del Monte Forest on the Monterey Peninsula. Sales are regaining their health, with two homes going for more than $7 million within a month. The big draw is no mystery: Pebble Beach is all about striking — and we’re not talking pickets.
Median 2009: $1.1 million
Median 2010: $1.1 million
Bob Hope and Dinah Shore would hardly recognize the old place. Late 20th century development spawned the local golf and tennis meccas of Palm Desert, La Quinta and Indian Wells, home of the Vintage Club, the most exclusive golf and tennis community around. Its award-winning Tom Fazio-designed links are surrounded by pristine lakes on 712 acres of plush oasis. Privacy and seclusion are the big differentiators at the Vintage Club, which boasts security systems designed specifically to keep the paparazzi at bay. Residents are said to include Bill Gates and Denzel Washington.
Median 2009: $2.6 million
Median 2010: $3.3 million
12. Brays Island Plantation, S.C.
This isn’t the kind of plantation where you pass the afternoon sipping mint juleps. Far from it. The 5,500-acre development wants to make you — and the kids — break a real sweat. Located halfway between Charleston and Savannah, Brays Island gives you fingertip access to golf, fishing, horseback riding, shotgun sports, wing shooting and boating. A full-time staff of about 110, including a naturalist, makes sure you get the most out of it all. The grown-ups don’t have all the fun; kids can be kids too. The children, often grandchildren, get to ride bikes on miles of hard sand roads with nary a care in the world. All of the sporting pursuits that would normally require country clubs, stables, marinas and the like are available in one place — making it all the easier to keep an eye on the young ones. Buying into the place is a great way to make sure they keep coming back.
Brays’ unpretentious low-country houses blend into the landscape. Your neighbors will include the heads of major companies and members of some of America’s leading families, but you won’t hear them boasting about it. That’s just not the Brays way.
Median 2009: $625,000
Median 2010: $1.8 million
13. Sun Valley, Idaho
If you happen to be a media mogul, you already know all about this place, thanks to the annual high-octane confabs put on by Allen & Co. The skiing, of course, is world-renowned; the resort is even credited with introducing the first chairlift. The homes are another matter — they’re famously private.The area has long been a sparsely populated haven for celebrities and titans of industry. Tom Hanks and Demi Moore are just two of the stars who hide out in the valley and nearby Ketchum. Many stay away because it’s difficult to reach. It helps to have a private jet and up to $15 million for a roof over your head.
Now, after more than 30 years, the owners of the ski resort are finally developing a near-mountain luxury community, White Clouds, replete with golf, hiking and a cross-country ski center. No homes have been built yet, but 29 lots are on sale for roughly $1.5 million to $3 million. Prices for Ketchum:
Median 2009: $4.6 million
Median 2010: $3.4 million
14. Lake Geneva, Wis.
Wealthy Chicago families have long gravitated to the shores of Lake Geneva for summer and, increasingly, winter fun. A two-hour drive from LaSalle Street, the lake boasts 26 miles of shoreline and a reputation as the “Newport of the West.” The Wrigleys, the Mortons (of salt fame) and the toilet-making Crane family all built mansions along the shore. Lake Geneva is now the preserve of the Pritzkers, AON founder Pat Ryan and noted investment manager Richard Driehaus
Some 35 lakefront properties are now on the market with more coming this spring. Good bargains pop up from time to time: A foreclosure sale of a home with “lake access” garnered $1.5 million. In all, 17 homes changed hands last year.
Median 2009: $2.82 million
Median 2010: $3.55 million
15. Asheville, N.C.
Asheville is a funky town nestled in North Carolina’s Blue Ridge mountains. It has a thriving art and music scene, and a burgeoning reputation for micro-breweries. A University of North Carolina campus keeps the town young and vibrant.
It’s an easy place to live in, with enough culture and outdoor activities to keep even the most demanding resident satisfied. The Biltmore Forest development behind the world-famous Biltmore House is especially inviting. The tree-lined streets of Biltmore Forest, developed in the 1920s, reflect the vision of Frederick Law Olmsted, the landscape master who designed New York’s Central Park. The houses have an English country feel, plus access to a Donald Ross-designed golf course.
To some extent, Asheville is still in transition from Southern mountain town to major destination. But it already has come a long way. Think of it as the value buy for patient homeowners.
Median 2009: $635.000
Median 2010: $982,000