Beacon Hill

Barrons is bragging how they called it: the second home market has bottomed, and the rich are out swooping up the bargains. Prices of high-end second homes have sunk, some as low as 40%. And Barrons lists the top second home markets in the US. Sea Island, Georgia was rated number one. Next comes Maui, The Hamptons, Aspen, Martha’s Vineyard, Lake Tahoe, Kiawah Island, S.C., Palm Beach, Pebble Beach, Greater Palm Springs, Sun Valley, Bray’s Island Plantation, Lake Geneva (where I used to go as a Chicago kid), and Ashville, N.C. The Barrons report (not sure if sub. req.) tells why these places are so glorious, and lists average prices like $2.5 to $4 million. With prices and places like these, no wonder readers got ticked off — check the comments!

Here’s the deal, and one of the many reasons why I started this blog. Second home ownership is totally affordable. I repeat: you do not have to be a zillionaire to own a second home. Like anything, it sure helps. But you can buy second homes for right around a million or less. $150K to $500K even.

I agree the bottom has hit the second home market, and the rich are buying. I will add some are striking deals and paying cash. Today I had lunch with Andrew Hadley, Director of sales and marketing at Beacon Hill. Beacon Hill is a beautiful community on Cedar Creek Lake, which I call the Pebble Beach of Dallas, and it’s only 45 minutes away.

And totally affordable.

Here’s the deal: the rich always set the pace. But second home ownership on a way less than $2.5 million basis is out there, and many communities are within driving distance of Dallas, Austin and Houston.

Beacon Hill plans a state of the art jetty-protected marina, floating boat slips, decked-out party rooms, deck space, boat launch, and a sandy beach. Party rooms will be veritable sports bars, with multiple flat-screen televisions, bars, and private owner storage. Construction is using ocean-grade specs. Lots start at $125,000.

Andrew, who has practically worked all his life in second home sales — he worked in chi chi Aspen, too — tells me people want affordable second homes. Couple to three thousand square feet, no giants. Lock and leave. Cedar Creek is really popping — I plan to live out there this summer. There’s the 505 Cedar Creek Ranch Club — 56 waterfront home sites, archery, skeet shooting, ATV, hiking, horseback riding, fishing, camping and future polo field. Home sites start at $295,000.

Cinnamon Shores, down in Port Aransas: get a house for $525,000.

The Reserve at Summit Rock plans a 50-home, golf-front development overlooking Summit Rock Golf Course, a soon-to-be-completed Jack Nicklaus Signature Golf Course. The Reserve at Summit Rock fronts holes 17 and 18 of the course, which will be owned and operated by the Horseshoe Bay Resort and is expected to be ready for play by May 2011. Oh and some of the homes will be Jack’s “Signature” houses. Casitas, none larger than 3000 square feet.

You want to talk townhomes and condos, talk to me. Gulf Shores Alabama is a fire sale right now. I’ll bet you could pick up a beach condo there for $125,000. Or less. A friend with a condo in Watercolor is building a home in the area, South Walton, Florida. These people are professionals who have certainly worked hard and educated their kids and now want to have a place where family can gather as they wind down working. Maye it’s a future retirement home. Maybe they’ll create a family vacation compound so the kids and grandkids can go there long after mom and pop are gone and remember the old geezers with fondness.

People have been escaping to second homes for centuries, But now second homes are not just for the uber rich.

If you are mulling a location for your second home, here’s an article that is like a beacon of real estate appreciation light: the 50 most expensive small towns in the U.S. At first when I read this, I was sad: most of the towns are in New York, New Jersey, Maryland, Washington (state), Cali and Florida. (Jupiter Island, home of Tiger Woods, has been holding court at number two spot for a long time.) Those places are pretty far from me in Texas. But then the investment light-bulb went off. What can we learn from this list about making a sound investment in a second home? Let’s face it, we do not want to buy in a place where values are going to plummet. And no one really expects huge appreciation in this market short term. Long term is what it’s all about, and if I buy, I want a place my grand kids can say, boy that crazy granny of our’s was one smart cookie to buy this when she did. We could never touch this now.

So what do we learn from this list, no matter where we are buying?

1. Buy where other rich people are buying. I know this sounds like “follow-the-Prada” herd mentality, but there is a kernel of truth. Why has Aspen real estate always done so well? Because people with money, who are insulated from market turns and tuggles, live there. They don’t have to sell because they are underwater. They don’t get underwater. They weather the storm and hence, your neighbor’s property values are not about to go into the toilet.

2. Buy near a body of water. With the exception of a ski home, or possibly a mountain retreat, people have a natural inclination to flock to water. (I swear I stared this blog just to be able to buy a beach house all my own, somewhere.) Maybe it’s the evolutionary genes calling us back to the water, but look at this list and find me one spot that is not near water. Yes, there are storms and hurricanes and wood rot and oil spills but has anyone heard about the end of building on Florida’s Gulf Coast? Will Pebble Beach ever be underwater? I don’t think so.

3. Golf courses must be good for real estate value. I’m told that during the boom, a golf course was developed almost every day in the United States, which means we have a ton — way too many, in fact. And golf is a dying game. The younger gen doesn’t embrace it like our gen, and our gen is not even as golf hardy as our parent’s gen. Golf courses have had to make drastic changes to stay in business — go casual, offer amenities, go green. And they are costly to maintain so watch your HOA dues that may be shelling out big bucks for tees. Still, if there is a golf course nearby, it means something for friends to do when they get together. It’s an added plus and besides, the wealthy love to golf.

4. Activities are a must. You can only hike and bike so much, and getting fried on the beach is no longer fun nor recommended by dermatologists. A good second home community is not too far from great shopping, movies, restaurants, equestrian centers, wineries, skiing (if mountains), fishing, boating. One of my sources tells me he is seeking a resort with great snorkeling because not everyone can S.C.U.B.A., but even a 70 year old can snorkle.

5. Find a town where people don’t worry about locking their doors. The town is small but loaded with families. It is safe enough that small kids can have total freedom during the day. We used to ski in Utah at Snowbird when our kids were young. I’ll never forget the freedom I felt when I said, here are the keys to your room, you are free to go anywhere in the resort. We lived in a big city where they had to be shadowed, supervised and shuttled everywhere for protection. How refreshing it was for both of us to be able to navigate in a safe environment, much like most of us did growing up in the 1950’s and 1960’s.

Let’s face it: the value of property in places like Aspen just doesn’t tumble. It may take a hit from peak pricing, but honestly, will the average price of an Aspen home ever go back to $50,000, where homes were years before the boom? The average Aspen home is now about $6 million and the community is so loaded with second (or multiple) home owners, many of these beasts sit empty most of the time. That does not create good community: at least one developer is putting together a neighborhood where full time residency is required.

Alas, now may be the best time to buy in Aspen, where one local agent says people with serious money always seem to float. And if money gets tight, many second home couples are selling primary homes in the city and moving to Aspen full time, which could alter the city’s dynamics all over again.

This puppy: a mere $35,750,000.