Vacation Home Sales Help Steady Ailing Home Market

Lonnie Runkle has been through the paces of purchasing a home and so have many of his clients.

Runkle, principal broker for United Country Team Runkle Realty, is just one of many Northwest Arkansas real estate agents who routinely work with buyers looking for a vacation or second home in the Northwest Arkansas market.

“Just yesterday I spoke with a man who lives in Florida about some property we have here in Arkansas,” said Runkle. “He was looking for some rural land to purchase for summer and weekend getaways.”

Patti Gardner, real estate agent for Beaver Lake Realty LLC, said she talks to people looking for a vacation home on or near the lake almost daily.

The demand for a vacation home in Northwest Arkansas has remained strong, Gardner said, despite the overall decline of home sales.

The National Association of Realtors reported 3.34 million vacation or second homes were sold in 2006, a 16 percent increase from the year prior.

Second home sales accounted for 40 percent of all homes sales in the United States in 2006.

The Arkansas Realtors Association doesn’t track homes sold as vacation or second homes but Gardner and Runkle estimate about 40 percent of their listings are sold as second homes.

“Vacation homes sales are a major boost for the area’s real estate industry,” said Carolyn Mitchell, executive broker for McKimmey Associate Realtors in Bella Vista. “They have remained steady for us during the past year.”

Robin Phillips, broker and owner of United Country Little Switzerland Realty Inc. in Eureka Springs, said second home sales remained steady for her office throughout 2006 and 2007, and inquiries have actually increased since the beginning of the year.

“The people who are buying second homes or vacation homes are affluent enough that they aren’t really affected by the market,” Phillips said. She estimates as many as 50 percent of the properties she sells are second homes.

“Most of my second homebuyers are baby boomers and aren’t really feeling the pinch.”

Phillips said she fields a number of calls from people in Kansas and Texas looking for a second home in the Northwest Arkansas market.

Gardner said the average price of a second home purchased in Northwest Arkansas is $200,000 to $350,000.

Stefan Gerlei, Northwest Arkansas branch manager for Wells Fargo Home Mortgage, said Wells Fargo has seen a steady increase in the purchase of second homes.

Gerlei said lending standards for a vacation home mortgage are typically more stringent. 

“Additionally, buyers of second homes may have to show more reserve in their checking and savings accounts that could be used to pay principal, interest, tax and insurance in the event of an emergency than what a buyer of a primary home needs to show at settlement,” Gerlei said.

Mitchell said financing is almost never an obstacle for her second homebuyers and many buyers opt to pay cash for their second homes.

“They can afford that second home without having to hassle with the financing,” Mitchell said. “They are able to pay for the home the moment they start looking.”