Investors Dropped Out of Housing Market in '06:

But Lots of Buyers Are Still Looking for a Vacation Place

Source: The Dallas Morning News
Publication date: 2007-05-01
By Steve Brown, The Dallas Morning News

May 1--Investors hightailed it out of the home market last year, a new report confirms.

But buyers were still shopping for vacation homes.

Sales of homes to investors plunged almost 30 percent in 2006, according to the study released Monday by the National Association of Realtors.

Even so, more than 1.6 million U.S. homes were purchased by investors.

About 22 percent of all houses sold last year were acquired by investors, compared with about 28 percent in 2005, the Realtors' research found.

It was the lowest percentage of investment sales in three years.

"We expected the drop in investment sales because speculators left the market in 2006, which caused investment sales to fall much faster than the primary market," economist David Lereah said in the report.

But buyers of vacation or weekend houses shrugged off worries about a stalling housing market.

About 14 percent of U.S. home sales last year were for vacation or weekend use -- a new high.

Sales of vacation homes increased almost 5 percent in 2006.

At the same time, sales of primary homes dropped about 4 percent.

"The rise in vacation home sales is based on strong demographic and lifestyle factors," Mr. Lereah said.

"The demographics favor vacation home sales because large numbers of consumers are in the prime buying ages, and buyers want recreational property for personal use -- investment is a secondary consideration," Mr. Lereah said.

The Realtors' survey found that the average vacation homebuyer is 44 years old, has a median household income of $102,200 and buys property within a few hundred miles of their primary residence.

The South and West were tops for vacation home demand.

On average, investor buyers were younger and had less income than vacation homebuyers, according to the Realtors' study. And they bought properties a median distance of 22 miles from home.

More than 40 percent of investment buyers said they were making the purchase to diversify their investments and generate rental income.

Investment buyers said they planned to hang onto their property for a median of five years.

The median price of vacation homes purchased was down slightly to $200,000.

The median priced investment home sold for $150,000 -- down more than 18 percent form 2005.

"Anecdotally, part of the drop in the median investment price results from investors shifting away from pricier markets like Florida, Nevada and Arizona, and into affordable locations," Mr. Lereah said.

High-rise condos to go on auction block

Centrum investors are using strategy that's new to Dallas

12:00 AM CDT on Tuesday, April 10, 2007
By STEVE BROWN / The Dallas Morning News

The owners of an Oak Lawn high-rise condominium have decided to auction off more than a dozen of the luxury residential units.

The condos are on the top floors of the Centrum tower at Oak Lawn Avenue and Cedar Springs Road.

Thirty-four living units in the building were purchased in late 2005 by Centennial Real Estate Corp. of Dallas and GEM Realty Capital of Chicago.

The rental units were converted into condominiums and have sold for more than $500,000 to almost $3 million.

Now the owners plan to auction off 15 of the unsold condos May 20.

Sheldon Good & Co. of Chicago has been hired to handle the auction.

Five of the units will be sold without a minimum bid.

The auctioneer is suggesting that opening bids for the high- rise properties start between $250,000 and $500,000 for the condominiums, which range from 1,362 square feet to 5,164 square feet.

"We want to sell the building out," said Steve Levin, president of Centennial Real Estate. "Our partnership group thought this was a great way to sell a lot of units very quickly.

"This is a strategy that hasn't been done here but has been done in other markets successfully," he said. "I think other people here will do it."

The Centrum investors also plan to sell a three-story penthouse unit in a sealed-bid auction.

"We decided to break with traditional marketing efforts," said Travis Mathews, a vice president at Briggs-Freeman Real Estate Brokerage who is marketing the units. "We've had a great response from fellow real estate agents."

Mr. Mathews said that about eight of the 34 units in the building have been sold and that most of what's available in the building is going up for auction.

Any remaining units after the auction will be listed for sale, he said.

The auction of high-rise condos doesn't happen often in the Dallas market – "certainly not at the higher end," Mr. Mathews said.

Dallas housing analyst Mike Puls said the planned auction is a sign that the high-rise condo market has softened.

"The air is coming out the bubble," Mr. Puls said.

The 19-story Centrum opened in 1987 with two floors for retail space and 250,000 square feet of offices. The residential units occupy the stair-stepped upper floors.