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Resort-based micromarkets offer a unique niche of product to consumers — one that is not as much local, but rather a global search. Purchasing a vacation home allows consumers to get creative with retirement planning, build an investment opportunity with a personal use strategy and, importantly, open the option to cancel their return flights after receiving word of the next snow report.
This type of purchase is a rare combination of investment tied with personal life ambitions and desires. Resort markets involve distinctive response patterns to market corrections, values and other attributes. Take, for instance, a single-family purchase that is 20 minutes by car from a world-renowned ski mountain versus a ski-in/ski-out mansion.
For all hopeful vacation homeowners, don’t let this idea slip away due to daunting seven-digit price tags. If you are willing to get creative and remain flexible, there will always be a property, or at least a process, that will help get you to your dreams. The following are five aspects to consider when determining vacation home potential.
Value
Value, setting aside monetary value, is the regard that something is held to deserve — the importance, worth or usefulness of something. Vacation homes aren’t just another purchase. Demand isn’t necessarily drummed up by families striving to follow the American Dream of becoming a homeowner. This is a search with a much different dynamic, which ultimately will change the value and search criteria for your purchase. Would you take an unavoidable hit financially in order to make your vacation home dream a reality?
Additionally, within a ski or snowboard resort, the product varies immensely for, say, a shred-or-die enthusiast with some extra change versus a CEO on Wall Street. In a family with two children and each parent working 60-plus hour workweeks and struggling to stay afloat, most people do not just wake up and say, “Honey, I think we should get a place on the beach.” It is important to understand the privilege before one can understand the value.
Make Or Break
How many times have you heard or thought, “Let’s just get a really nice property that will cash flow for our family to use a few times a year?” Realistically, dependent on your price point, this mindset can be a challenging dynamic to obtain if you are in search of 20% down cash flow scenarios. Resort homes require high prices, high costs of living and often high HOA fees (the latter often being a deal-killer). You may have to get creative with your ownership, perhaps by using the property for a preferred tax benefit or write-off.
Positives
Traveling to a resort destination often involves incredible scenery, whether it’s the vast expanses of mountain ranges, distant ships or a wide array of local vegetation. Something new is always nice. Local cultural characteristics mixed with modern trends are often extrapolated into a large mix of recreational activities and amenities. Snow skiing, gatherings, surfing, places to enjoy the surroundings — in most vacation destinations, you’ll be able to find something that fits your tastes.
Likewise, there are many different types of real estate products and ownership levels, from timeshares and partial ownership to turnkey options or single-family homes on 100-acre lots. If not the above, try simply searching for a home in a blue zone to unlock increased longevity and enhanced personal well-being. Or, try a prescription for the highly recommended “Nature Rx.”
Negatives
In light of the positives listed above, demand is high in resort destinations, and home values typically follow suit. A quick search of Zillow can help answer any questions of value in your desired area, but I’d recommend speaking with a local professional to save you time and from any assumptions.
The daily costs of living are typically higher than average in resort areas. This can be due to transportation methods and shipping, local businesses involvement and other specifics. Many resort areas, because of their environmental qualities, can be more or less desirable to visit depending on the season.
Is It Worth It?
If you are the type of person who is saving all earnings for a ticket to Mars on Elon Musk’s first commercial flight, this may not be your type of gig. For those on the other side, a vacation home in a resort destination can be a pretty good place to stash your earnings.