An excerpt from an article posted on BankRate.com
2nd-home market offers bargains
Should consumers start looking for the vacation house of their dreams?
Home prices have fallen steadily across America since 2005. In many popular second-home markets, shoppers looking for a second home can find great deals.
"Now is the time to buy," says Randy Johnson, the mortgage expert at Credit.com.
The full-blown financial crisis and sharply falling economy have combined to pop the bubble for second homes, sparking significant price declines in vacation-home markets across the country.
That time to buy may be now. The 3.6 million existing homes for sale at the end of January represented a 9.6-month supply, according to the National Association of Realtors.
Some of the best deals in today's market can be found in foreclosures and short sales, which are pushing prices lower, says Jack Neuman, a broker at ReMax Advantage Plus in Boca Raton, Fla.
"All the really good deals are short sales, where the lender is willing to take less than what the mortgage is worth," Newman says. "It's no longer a typical real estate market where buyers and sellers agree on a price. Instead, the price is where the bank is willing to take a hit."
Short sales and foreclosures currently make up a small but significant slice of home sales in the Hilton Head region, Twisdale says.
"In the last 90 days of 2008, there were 90 sales in the range of $800,000 to $1.2 million," he says. "About 10 percent were bank sales, foreclosures or short sales. Buyers come in preapproved and ready to jump. When these homes hit the market, if they're priced well, they disappear in a matter of days."
"This is a good time to buy because you couldn't replace these houses for the price they are currently selling for," Newman says. "If you were to duplicate a house in this area and build from scratch right now, with increases in the price of labor and materials such as concrete and metal, the new home would cost more than the existing home. So you can get a much better deal with an existing home."In parts of Florida, values have fallen so low that prices have sunk below replacement costs, Newman says.
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