Headlines – Week of January 30, 2011
February 5, 2011
Market for Vacation Homes Is on the Rise
According to a recent article in the Wall Street Journal, sales of homes in many vacation communities across the U.S. soared last year to levels not seen since boom times — driven by deep discounts, cash purchases and buyers’ rising stock portfolios.
Areas on the rise include Mercer Island, Wash., where sales nearly tripled in 2010, compared with a year earlier, reaching par with 2006 volume there. On Hilton Head Island, S.C., sales rose 14% for the year and Palm Beach, Fla., experienced a 40% annual increase and a 54% increase in homes under contract, indicating an especially strong fourth quarter. Palm Beach sales volume now is comparable to its 2007 peak.
Everyone is asking whether the momentum will last but the strength of second-home sales paints a very different reality to the overall housing market, which is expected to worsen in 2011.
The Case-Shiller housing index of 20 cities showed prices across the U.S. fell at the end of 2010, and most analysts predict another 5% to 10% slide in 2011.
According to economist Lawrence Yun of the National Realtors Association, the comeback has been helped by gains in the stock market and an improving economy, which have made wealthier Americans more upbeat about the future. According to the NAR, one in 10 real-estate transactions in 2009 was for the purchase of a vacation home. And though a small fraction of the overall market, it is significant because vacation homes are often big-ticket properties and attract discretionary buyers.
In some locations, prices are even inching upward. As an example, in Cape Cod, MA sales climbed nearly 9% in 2010 from 2009, while prices rose 7%. Monroe County, PA (Pocono Mountains) saw a 3% decline in transactions, however, its Lake Naomi resort community was up nearly 15%.
In most markets where demand has improved, prices have not increased mainly due to financing where banks are requiring 25% down and crystal clean credit.
Some second homes had been stuck on the market because sellers wouldn’t budge on price; unlike owners of primary homes, they often aren’t in a hurry to move.
Floridians grow suddenly optimistic about economy
According to a survey conducted by the University of Florida – Survey Research Center in the Bureau of Economic and Business Research, consumer confidence among Floridians soared an unexpected seven points to 77 in January from the revised December index score of 70.
The increase is the largest since the index rose seven points from March to April 2010, and the score of 77 is the highest since the April 2010 mark of 78.
Each of the five components that make up the index registered gains, with the largest increase coming in the perceptions of U.S. economic conditions over the next year category, which climbed 12 points to 78.
Confidence in purchasing big-ticket items, such as cars and appliances, rose eight points to 84, and perceptions of U.S. economic conditions over the next five years also reached 84, a six-point increase. Perceptions of personal finances now compared with a year ago rose four points to 55, and perceptions of personal finances a year from now rose two points to 83.
Many believe the unexpected rise may have resulted from sustained gains in the stock market over the past two months and recent media coverage that has focused on an improving economy.
Floridians are benefitting as their investments in the stock market – either directly or through 401(k) and pensions – have improved their portfolios.
Despite the increase in confidence, unemployment and declining housing prices remain troublesome and while most economists expect improvement on the job front over the next year unemployment will remain high.
The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for January was collected from 418 responses.
New York Tourism Hit Record High in 2010
According to an article in the New York Times, despite the lingering effects of the recession, more people visited New York City in 2010 than in any other year.
The problems in the economy did not stop an estimated 48.7 million people from visiting the city last year. The estimated increase of almost 7 percent came after tourism in the city dipped to about 45.5 million visitors in 2009.
Visitors, many of them from foreign countries had extra buying power against a weak dollar. Tourists spent $31 billion in the city last year, up about 10 percent from 2009.
The article reported that the hospitality industry — hotels, restaurants, museums and attractions — added 6,600 jobs last year and now employed more people than it ever had, about 320,000 workers. At the region’s airports, including Newark Liberty International, the number of domestic travelers was flat and still below prerecession levels but the number of passengers on international flights was nearing an annual high heading into December.
Even with a hotel-building boom that began before the recession, the city’s hotel rates averaged more than $250 a night in Manhattan. The overall occupancy rate for hotel rooms in Manhattan in 2010 was more than 85 percent, up about 5 percent from 2009.
Several museums logged their highest annual attendance last year. At Museum of Modern attendance surpassed three million in the fiscal year that ended June 30. At the Guggenheim Museum, attendance was about even with 2008’s, slightly more than 1.1 million visitors, but down from 1.3 million in 2009, when the museum celebrated its 50th anniversary.
New York is expected to rank as the country’s top tourist destination for 2010, beating Orlando, Florida.
Posted by Scott R. Lodde