July 8 (Bloomberg) — Demand for U.S. luxury vacation properties may be fading along with prospects for faster economic growth, after an early 2010 rebound.
Iain Heydon traveled to Colorado’s Rocky Mountains three times during the past year looking for a vacation home in Grand Lake, where waterfront properties list for as much as $3.95 million. After seeing more than a dozen houses, he has yet to make an offer.
“I’m watching to see what happens to the U.S. economy,” said Heydon, 46, who lives near Basel, Switzerland. “The market for these homes may not have reached its bottom.”
Demand for U.S. luxury vacation properties may be fading along with prospects for faster economic growth, after an early 2010 rebound. The government last week reported slower growth in private-sector jobs and manufacturing and a decline in factory orders. While rates on jumbo mortgages used for many expensive homes have dropped, it’s harder to qualify.
“There is a lot of concern about a double-dip recession that’s keeping people on the sidelines, especially at the high end,” said Mark Goldman, a mortgage broker with Cobalt Financial Corp. in San Diego.
The housing market deteriorated in May, with new-home sales tumbling to a record-low annual pace of 300,000, the Commerce Department said last month. Purchases of previously owned homes unexpectedly fell 2.2 percent, even with buyers eligible for a federal tax credit, according to the National Association of Realtors. To qualify for the benefit, buyers needed a contract signed by April 30 and have until the end of September to complete the deal.
Demand for expensive vacation homes is especially sensitive to economic weakness because it isn’t driven by a need for shelter, said Dennis Capozza, a housing economist who teaches at the University of Michigan in Ann Arbor.
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