Resorts and the real estate bubble

All over the United States, home prices have declined; in some places more than others to the point that we even hear that, in some places, prices have reached “rock-bottom.” At sea and mountain resorts, the situation is strikingly different. A lot of inventory is for sale at “peak-bubble” prices of eighteen month ago and, of course, nothing is selling. Many of the sellers are said to have enormous equity in their homes and are just “fishing” for some ready and willing buyers that don’t exist anymore. Only a few really have to sell either because they’re moving out of town, are going through a divorce or just need to liquidate the asset. Those are the ones that will have to meet the real market price if and when they sell.

My sense is that this game of chicken that has lasted for almost two years will end later in 2009 and prices will begin nosedive all through 2010 and 2011. To make matters worse, there’s a plethora of rather large homes (4,000 square feet and above) that will need to be discounted even more as ostentatious assets are becoming out of fashion and costs of maintaining or remodeling such “monsters” will quickly prove to be prohibitive. Further, with easy money drying up and more stringent rules being applied on second-home and condominium loans, this will further make matters worse. The bottom line is that there might be some very good deals coming soon at a ski resort or beach community near you…