It was a mere 20 months ago when Newsweek writer Daniel Gross declared the vacation home dead. He wrote a whimpering piece, titled “Good Riddance To The Vacation Home”, that detailed his disgust for the vacation home, a disgust I believe was owed to a Michigan upbringing and a false belief that a swimming pool and trampoline trump a vacation home. Mr. Gross was pleased to make his unfounded declaration as vacation home sales shrunk, and many people, both intelligent and not so, spoke of a harnessing of egos that would certainly lead to the demise of the once lofty vacation home ideal.
Just last night, I caught a sheepish Bill Gates on some interview that appeared to be dated, though, in part that may be owed to Mr. Gates himself having an uncanny ability to appear dated no matter what the date. Mr. Gates was defending/denying his luxurious waterfront estate in Seattle. The interviewer quizzed him on some of the appointments of said home, including a pool, a movie theater, and other such superfluous worldly desires. Mr. Gates blushed and promised to give away more of his wealth. On another channel, or the same channel, later last night, there was Mr. Bernanke, decrying the displays of wealth that stemmed from Wall Street in the style befitting both the 1988 and 2010 Mr. Gecko. Mr. Bernanke was talking about the end of an era, where conspicuous consumption of wealth and their inconspicuous displays were something of the past. Something we should be ashamed of.
If the vacation home, and the apparent fee simple showcase of wealth that they broadcast, is dead or dying in the minds of Messrs Gross, Gates, and Bernanke, then someone obviously forgot to tell the rest of the world that vacation homes were no longer necessary. A Wall Street Journal story from Monday highlighted the obvious errors in judgment that vacation home haters were diligently engaged in. Just as Daniel Gross declared the vacation home dead in May of 2009, the Wall Street Journal has declared it alive and well in January of 2011. In fact, I believe I just saw the market jogging past my office, backwards, up Geneva Street, in an obvious display of youthful vigor.
It seems as though vacation home markets nationwide experienced a resurgent 2010, as many stories from the spring of 2010 accurately forecast. Markets from coast to coast are alive again, if mostly so because of price drops and an increased feeling of wealth by those who might be in the market for such a retreat. The latter half of that sentence is what’s important to me, as the statement was echoed from New York to San Diego, as if agents nationwide have been sneaking peaks at my blog and gleaning their talking points from it just as other agents have a nasty habit of doing the same (maybe). Price declines might have fueled these vacation home markets, but the real source of the flame is increased buyer confidence, which in this market, translates simply as an increased feeling of wealth.
It’s not necessarily increased liquid wealth that spurs vacation home markets forward, rather it’s the feeling of overall wealth. This sort of feeling comes primarily from increases in stock portfolios, which is why stock market returns are more important to vacation home markets than unemployment statistics. The unemployment rate amongst the affluent is currently hovering around 3%, which is considered to be full employment by economists, which further supports my belief that job markets impact vacation home markets insignificantly. Stock market returns, or losses, fuel confidence or fear among the affluent, and the increased valuations during 2010 helped push many buyers that had previously been sick with worry on the sidelines, right onto center court.
The question for all vacation home markets is whether or not the 2010 buying pool will be replaced with new bodies who share the motivations of their 2010 brethren. It will all boil down to the exchanges and the price of stocks and commodities. If portfolios remain steady, or happily increase, 2011 should be a good year. With cash purchases reigning supreme in vacation home markets (a luxury, not a requirement), rising interest rates should mean very little to this particular segment. Along the lines of that “wealthy feeling” being important for our market, stay tuned next week for what Mr. Quinn’s absurd tax hikes will ultimately mean for the Lake Geneva real estate market. Hint- it’s not a good thing, but you already knew that. Thanks Unions!
While many in the media were quick to giddily proclaim the vacation home dead, the feeling of pulling into your very own lakeside retreat on a sultry July afternoon cannot be matched by an afternoon of sweaty bouncing on a suburban trampoline. The excess that many thought was a passing fad is thankfully alive and well, as those who have worked hard to afford such a lifestyle should never feel ashamed of their accomplishments, no matter how much rich guilt Mr. Gates possesses. The vacation home is alive and well, and somewhere Mr. Gross is alone at the closed casket funeral of the market that he prematurely declared dead.