Saturday, March 22, 2008
As economy slumps, second homes lose value as they sit unsold for months
Joel J. Smith / Special to the Detroit News
When Paul Bucci hung the "For Sale" sign on his Higgins Lake vacation home, he never dreamed he'd still be looking for a buyer 16 months later.
But in all that time Bucci, who built the house six years ago, has received only a single offer of $99,000.
That's $30,000 less than he had in mind for the three-bedroom chalet near a golf course.
"This isn't a shack. This is a beautiful year-round home," said the frustrated Bucci, a Chrysler worker from Grosse Pointe Farms. "I'm keeping the 'For Sale' sign up. I'll just sit on it if I have to. But I'm not giving it away."
Bucci, like thousands of other property owners, is learning the hard way that the fallout from a troubled economy has rippled out to the lakes, rivers and swimming pools of Michigan's venerable northern vacation home market.
Many homeowners are stuck paying the mortgage on an up north cottage they can't unload because other families, who might once have ventured into the vacation-home market, are cutting back in light of job-security fears, stricter lending standards, the high cost of gasoline burned on weekend drives north or other economic concerns.
Unfortunately for sellers, this "buyers" market has come when many second-home owners are facing layoffs, lost overtime, cuts in pay or simply want to move out of Michigan and seek work elsewhere.
They are desperate for the money they have tied up in their vacation property but can't get their hands on it -- at least not very quickly.
"There are a lot more homes for sale and they are on the market for a longer period of time," said Rick Stein, co-owner of RE/MAX Bayshore Properties in Traverse City. "In some cases the market time has doubled or tripled in just a year or two.
"There is a price that every property will sell for. It's just a matter of if you're willing to accept that price and how long you'll wait to get it."
For many, it'll be a long wait.
For example, there are 3,568 properties listed for sale with real estate agents in the Traverse City area.
Not all are cottages, of course, but competition for buyers will jump dramatically in four to six weeks as the summer selling season approaches.
"Part of the problem we're seeing is there is no sense of urgency on the part of the buyers," said Stein, who has been a real estate agent for 30 years.
"Buyers are looking, looking and looking. Everybody is waiting for the bottom of the market whenever that comes. They all want a deal."
Selling first home instead
Joyce Adams-Pranion of Grosse Pointe Park has become so frustrated with trying to sell her two-bedroom log cabin on Saddleback Lake in Oscoda County that she has torn down the real estate sign and listed her downstate residence for sale instead.
She said that if she and her husband, Doug, who is disabled, can sell their Metro Detroit home, they will move up north, where the cost of living is cheaper.
"I've had that property listed for three years," Adams-Pranion said. "People wanted to give me half of what I paid. We've cut the price from $129,000 to $104,000. But buyers are so ridiculous they want us to give it away for free."
Jeffrey Mansell built a house near Sugar Loaf ski resort in the mitten's northwest corner. He built it to sell it for profit, but his dream never materialized. For two years, as the house sits empty, Mansell has been paying $1,100 a month on that $175,000 loan, and better than $250 a month more in property taxes and maintenance costs.
"I haven't got a single offer on the property," said Mansell, a highway light engineer from Salem Township. "Right now, I'm just stuck with it. I hope with mortgage rates dropping, I'll be able to sell it. I never dreamed it would take this long."
Shoppers are savvier
Northern Michigan real estate agents say they are selling about the same number of homes as in the past, but for lower prices and after a lot more time and effort.
Daniella M. Bell is a member of the $4 million club for 2007 as an associate broker with Coldwell Banker Schmidt Realtors in Cadillac.
She said the high inventory has made it a buyers' market and buyers today are more savvy and educated than before.
"Buyers won't buy property unless they think they are getting a good deal," Bell said. "The sellers are beginning to see that they have to be more realistic in their pricing if they are going to sell their property. If a home has been on the market for some time, generally it's because it's priced too high."
She said northern Michigan long has been southeast Michigan's prime target area for vacation homes, second homes and retirement living. But Bell said that with financing tight, people who are interested in moving north to live or retire are dependent on selling their Metro Detroit property first.
"That just isn't easy to do these days," she said.
At Michaywe, a 900-unit development with a golf course in Gaylord, 65 properties are for sale. Real estate agents expect that number to climb to about 100 as the summer approaches.
"I know people who have two homes for sale -- one here and one downstate," said Fred Smith, the Coldwell Banker agent at Michaywe. "Whichever one sells first, they will move into the other one. It's tough selling a home today.
"There is nothing written in stone that thou shall make money on real estate. People have to bite the bullet sometimes and take the loss."
As economy slumps, second homes lose value as they sit unsold for months
Joel J. Smith / Special to the Detroit News
When Paul Bucci hung the "For Sale" sign on his Higgins Lake vacation home, he never dreamed he'd still be looking for a buyer 16 months later.
But in all that time Bucci, who built the house six years ago, has received only a single offer of $99,000.
That's $30,000 less than he had in mind for the three-bedroom chalet near a golf course.
"This isn't a shack. This is a beautiful year-round home," said the frustrated Bucci, a Chrysler worker from Grosse Pointe Farms. "I'm keeping the 'For Sale' sign up. I'll just sit on it if I have to. But I'm not giving it away."
Bucci, like thousands of other property owners, is learning the hard way that the fallout from a troubled economy has rippled out to the lakes, rivers and swimming pools of Michigan's venerable northern vacation home market.
Many homeowners are stuck paying the mortgage on an up north cottage they can't unload because other families, who might once have ventured into the vacation-home market, are cutting back in light of job-security fears, stricter lending standards, the high cost of gasoline burned on weekend drives north or other economic concerns.
Unfortunately for sellers, this "buyers" market has come when many second-home owners are facing layoffs, lost overtime, cuts in pay or simply want to move out of Michigan and seek work elsewhere.
They are desperate for the money they have tied up in their vacation property but can't get their hands on it -- at least not very quickly.
"There are a lot more homes for sale and they are on the market for a longer period of time," said Rick Stein, co-owner of RE/MAX Bayshore Properties in Traverse City. "In some cases the market time has doubled or tripled in just a year or two.
"There is a price that every property will sell for. It's just a matter of if you're willing to accept that price and how long you'll wait to get it."
For many, it'll be a long wait.
For example, there are 3,568 properties listed for sale with real estate agents in the Traverse City area.
Not all are cottages, of course, but competition for buyers will jump dramatically in four to six weeks as the summer selling season approaches.
"Part of the problem we're seeing is there is no sense of urgency on the part of the buyers," said Stein, who has been a real estate agent for 30 years.
"Buyers are looking, looking and looking. Everybody is waiting for the bottom of the market whenever that comes. They all want a deal."
Selling first home instead
Joyce Adams-Pranion of Grosse Pointe Park has become so frustrated with trying to sell her two-bedroom log cabin on Saddleback Lake in Oscoda County that she has torn down the real estate sign and listed her downstate residence for sale instead.
She said that if she and her husband, Doug, who is disabled, can sell their Metro Detroit home, they will move up north, where the cost of living is cheaper.
"I've had that property listed for three years," Adams-Pranion said. "People wanted to give me half of what I paid. We've cut the price from $129,000 to $104,000. But buyers are so ridiculous they want us to give it away for free."
Jeffrey Mansell built a house near Sugar Loaf ski resort in the mitten's northwest corner. He built it to sell it for profit, but his dream never materialized. For two years, as the house sits empty, Mansell has been paying $1,100 a month on that $175,000 loan, and better than $250 a month more in property taxes and maintenance costs.
"I haven't got a single offer on the property," said Mansell, a highway light engineer from Salem Township. "Right now, I'm just stuck with it. I hope with mortgage rates dropping, I'll be able to sell it. I never dreamed it would take this long."
Shoppers are savvier
Northern Michigan real estate agents say they are selling about the same number of homes as in the past, but for lower prices and after a lot more time and effort.
Daniella M. Bell is a member of the $4 million club for 2007 as an associate broker with Coldwell Banker Schmidt Realtors in Cadillac.
She said the high inventory has made it a buyers' market and buyers today are more savvy and educated than before.
"Buyers won't buy property unless they think they are getting a good deal," Bell said. "The sellers are beginning to see that they have to be more realistic in their pricing if they are going to sell their property. If a home has been on the market for some time, generally it's because it's priced too high."
She said northern Michigan long has been southeast Michigan's prime target area for vacation homes, second homes and retirement living. But Bell said that with financing tight, people who are interested in moving north to live or retire are dependent on selling their Metro Detroit property first.
"That just isn't easy to do these days," she said.
At Michaywe, a 900-unit development with a golf course in Gaylord, 65 properties are for sale. Real estate agents expect that number to climb to about 100 as the summer approaches.
"I know people who have two homes for sale -- one here and one downstate," said Fred Smith, the Coldwell Banker agent at Michaywe. "Whichever one sells first, they will move into the other one. It's tough selling a home today.
"There is nothing written in stone that thou shall make money on real estate. People have to bite the bullet sometimes and take the loss."
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