Hot Market for Second Homes Hits Slump

The New York Times reports:

The brand new 6,000-square-foot vacation home, backing on a boat dock on Moriches Bay, has been on the market for more than a year. After plenty of showings, but no offers, the investor who built the house recently cut the price twice, by a total of $600,000, to $4 million.

It has still not been sold. To be sure, the price reductions have created more interest, according to the agent representing the owner, and he now hopes that it will be sold right after Labor Day, a prime season for home transactions in the Hamptons.

“My feeling is that everybody is waiting for the dust to settle before they make their big decision,’’ said the agent, Ira Birns of Prudential Douglas Elliman. But, he acknowledged ruefully, “there is a lot to choose from.’’

It is not just the most expensive vacation homes that are going begging. The once-bustling deal making in a wide variety of popular locations for second homes — areas like Florida, the Jersey Shore and Lake Tahoe, as well as the high-price playground on the East End of Long Island — has slowed markedly in recent months.

It's not clear what "when the dust settles" means? Can these expensive properties double in price in the next five years? We doubt it but that's what some speculators look for.If you don't have speculators propping this market up you'll want good economic fundamentals like an expanding job base and increasing population.