Bargain Hunters Target Vacation Hotspots

Bargain hunters are sniffing out the best deals in parts of the country where the underlying economics are good but prices have fallen or look like they could fall from their height in 2005.

The most popular hunting grounds are those areas where there are lots of second homes, including Sante Fe, N.M., the Outer Banks of North Carolina, Cape Cod and Nantucket-Martha’s Vineyard in Massachusetts, and California’s Napa Valley. Prices in these areas actually haven’t fallen much, but the abundance of inventory on the market suggests that sellers may have to concede and cut prices if they want to sell soon.

In Miami and Las Vegas, where the problems stem from over building, prices are about 64 percent higher than they were in December 2002 when the run up began in earnest, according to Radar Logic. In Los Angeles, where tighter lending after the subprime mess has made getting financing difficult for some buyers, prices are 57 percent ahead.

At the height of the real estate boom, an investor could flip a house at a profit in as little as three months in many areas. Now the odds are stacked against a quick turnaround, experts say, and buyers should plan to hold onto properties for at least three to five years.

"I think to be an investor like this you've got to have a pretty strong stomach," says Jonathan Miller, chief executive of Miller Samuel, an appraisal firm.

Source: The Wall Street Journal, Christina S.N. Lewis (03/07/08)