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Vacation-home frenzy

Baby boomers are snapping up units in county and elsewhere, pushing market up 4.7 percent



May 1, 2007


DAN TREVAN / Union-Tribune
Front desk agent Jonathan Carow walked past homes at the Residence Club at the Four Seasons Resort Aviara in Carlsbad.
Investors largely exited the residential real estate market last year, while vacation-home buyers kept shopping, the National Association of Realtors reported yesterday.

It's been well-known for more than a year that sales of houses and condos were falling in many markets, including San Diego County, but this was the first national look at investor and vacation-home buying patterns since the housing slump set in.

In its survey of 1,412 home buyers, the association said investment purchases were down 28.9 percent and primary home sales were down 4.1 percent last year, but second-home buying was up 4.7 percent to a record 1.07 million houses and condos.

Real estate analysts noted the difference between forces motivating buyers seeking homes as investment properties and those wanting a vacation home. For vacation-home buyers, the decision to buy is based more on lifestyle choices and advancing age than on the potential for a quick profit.

“It has to do with the baby boom generation,” the 78 million Americans born from 1946 to 1964, said David Cabot, president of the San Diego Association of Realtors. “They are looking for vacation homes. It's a huge group of people.”

At the 97-unit, 32-story Sapphire condo tower downtown, due to open late next year, half of the 44 homes sold to date, including the 5,000-square-foot penthouse, have gone to second-home users.

Paying from $585,000 to $5.9 million, buyers are coming from the San Francisco Bay area and states as distant as Connecticut and Florida, as well as one from Canada.


Greg Henderson, chief operating officer of Centurion Partners and Avion Development, builders of the Sapphire, said buyers may live here four to six months a year. He said they are paying less per square foot than in San Francisco or in Vancouver, British Columbia.

“San Diego is quite an easy sell,” the Australia native said. “You don't have to convince many people about what a great place San Diego would be for your second home.”

DataQuick Information Systems released its own analysis of second-home and investor buying in February and found that purchases dropped 37.1 percent last year, compared with a 24.9 percent drop of all home-buying in the state. Cabot said the decline was largely attributable to fewer investors, not second-home buyers.

Most buyers of second homes in San Diego County were from elsewhere in California, led by Los Angeles, Orange and Riverside counties.

Meanwhile, San Diegans went shopping for second homes outside the county as well. The 12 most-popular ZIP code areas in the state attracted 381 second-home buyers from San Diego County last year, down 35.3 percent from 2005. Leading the most-popular areas were Big Bear Lake in San Bernardino County and La Quinta in Riverside County. Out-of-state purchases by San Diegans were led by Yuma and Las Vegas and were down 45.5 percent for the top 10 ZIP codes.

A variety of options ranging from oceanfront homes and high-rise condos to fractional ownership units attracts out-of-town buyers to the San Diego area.

New York developer Donald Trump opened sales last year at a condo-hotel development north of Rosarito and rang up $120 million in sales in one day for the first of three planned towers.

Brendan Mann, sales manager for the Trump Ocean Resort Baja, described the market as 65 percent tied to Southern California and extending as far as China and Ireland.

“The baby boomers don't have one second home, they have two or three, that's the thing,” Mann said. “A condo hotel gives people the ability to have two or three of these places and scoot around and have fun going to different places.”

A condo hotel allows buyers to cover part of their costs by earning revenue from hotel guests who use their units.

At the 329-room Four Seasons Resort Aviara in Carlsbad, 132 villas have been added as time-share units, where buyers can purchase a week's stay at a current cost of $65,000 in the summer and about $30,000 from October through June.

Chuck Goodman, 56, a Texas businessman whose company produces food and flower gift baskets, said he bought three weeks at Aviara for $75,000 three years ago and is unconcerned with the vagaries of the real estate market or the fact that time-share owners routinely resell at a loss.

“If I wanted to make money on real estate and have a second home,” he said, “I couldn't justify a 1,700-square-foot place in California that I use 21 days out of the year.”

Maxine Gellens, a Prudential California Realty agent specializing in high-end La Jolla properties, said that over the weekend she had two clients from Texas looking to buy vacation homes here.

“We've been saying that 30 percent of our sales are vacation, second-, third-, fourth-home buyers, especially in the high end, $3 million and up,” Gellens said.

Roger M. Showley: (619) 293-1286; roger.showley@uniontrib.com


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