Vacation Areas Poised for Strong Real Estate Appreciation

Over the past year or so, there has been a marked increase in people selling their Bay Area homes and moving to certain easily accessible get-a-way locations. In addition to offering a refreshing change of pace, many of these areas also offer a tempting arbitrage opportunity.

When compared to prime parts of Silicon Valley, vacation areas like Lake Tahoe, Carmel, and Sonoma and Napa Counties were hit far harder by the economic downturn five years ago, and they bounced back more slowly. This has created a huge disparity in home prices.

The current lack of homes on the market for sale, or inventory, has led to a remarkably strong sellers’ market, leaving some homeowners tempted to cash in. However, that same hot local sellers’ market leads to inertia. After all, what is the point of selling for big bucks if you would have to plow it right back into a new property? For some, the answer is to sell their highly appreciated homes and move somewhere more affordable.

The nice aspect of this plan is that the vacation home market is showing very strong signs of life. Most people are feeling pretty confident about their financial futures, which may lead them to consider buying vacation homes. We expect this trend to continue, which should fuel further appreciation of the vacation home market.

Out of the nearest top vacation areas, we have seen the strongest trend towards areas in and around Carmel. The combination of relatively low prices, close proximity to the Bay Area, and a beautiful setting proves to be a powerful attraction for many. These considerations, plus an optimistic view of the area’s likely appreciation, influenced Ken DeLeon’s decision to purchase a property on the beach in Carmel Highlands.

Although DeLeon Realty does not represent buyers or sellers in any of these vacation markets, we have found this trend interesting. Irrespective of whether someone is looking to buy a vacation home or to sell an appreciated property and move to a different area, we believe that the upward trend in home prices in these vacation areas will continue for the next five to seven years.