January 03, 2008
New Yorkers’ vacation homes: A day in paradise clouds over
Vacation destinations feeling the subprime pinch
By Dorn Townsend
New York City has weathered the national real estate downturn better than most American cities, but how have New Yorkers’ favorite
vacation destinations stacked up?
This month, for The Real Deal’s special supplement, we look at the second-home markets in destinations where New Yorkers have
traditionally flocked for their holidays, to relax with a book on the beach or to hit the ski slopes.
Broadly speaking, today’s credit crunch is spilling over into the second home market. But within that market, it is homes priced at the
mid-level, not the ultra-expensive, that are feeling the pinch. Experts say that prices are dropping faster for mid-level second homes
than for primary homes. (See Credit crunch takes bite of vacation houses.)
A year ago, residential markets were beginning to cool, but historically, low mortgage rates and strong demands from aging baby boomers seemed to stabilize prices for vacation homes. According to real estate professionals, that has now changed.
Hardest hit is Florida, the most popular second-home market in the nation. Roughly 15 percent of real estate transactions in the Sunshine State involve foreign buyers. The areas popular with international investors are faring better, but the overall market is still sluggish. (See Paradise tries to dig out of rut.)
Meanwhile, off-shore, vacation properties in Mexico and the Caribbean are booming. In Mexico, the surge stems from changes in
banking laws that finally allow foreigners to buy via mortgages. (See The mortgage comes to Mexico.) And in the Caribbean, the most
elusive of all purchases, a private island, offers another temping option. (See Needing their own private islands.)
Closer to home, the market is more fickle. Resorts and vacation home destinations in Vermont, for example, are testing new strategies
to lure weekenders by adding more off-season attractions like golf courses, performance centers, spas and day care facilities. (See
Drawing tourists after snow melts.)
Our supplement also looks at the status of the markets for New York City’s closest escape destinations. What we found is that the highest end of the market in the Hamptons remains strong. (See High-end Hamptons defies slowdown.) And many young professionals are
turning to the Catskills, traditionally a weekend getaway, for year-round residences because the cost of buying an apartment or home in
the city has become so expensive. (See Priced-out New Yorkers look north.) Finally, we looked at the rise of the Cape Cod community
of Provincetown as a destination for gay couples looking to buy vacation homes. The legalization of same-sex marriage in Massachusetts has helped to further establish it as an epicenter for gay homebuyers. (See Provincetown grows prouder.)
Vermont
Credit crunch
Litchfield
Catskills
Caribbean
Foreign buyers
Florida
Hamptons
Cape Cod
Mexico
Mucking out stables in Litchfield
Carolyn Klemm introduced power brokers to Connecticut horse country
By Carolina Reid
During the 1970s, the population of vacation-home owners in Litchfield County quickly
began to grow. The growth was fed by a stream of artists and intellectuals, many of
them supposedly on the run from the Hamptons, where they recognized that preppy
coeds, grating disco music and gridlocked weekend traffic signaled the end of their quiet
way of life.
Many first became acquainted with Litchfield County through Carolyn Klemm, a former
buyer for Bergdorf Goodman in Manhattan who along with husband David, co-founded
Klemm Real Estate. Longtime residents said Klemm’s weekend garden parties were a
gateway for the county’s transformation into a quiet retreat for the city’s intelligentsia.
Klemm said selling real estate wasn’t the only motivation for hosting those parties, but
recognized that her soft-sell approach could pay dividends. Understanding that her
clients sought solitude but not total anonymity, Klemm invited friends, and then friends
of friends, to her home in Washington, Conn. Over the years, her clients have included
Tom Brokaw, George Soros, former U.S. ambassador to the United Nations Richard
Holbrooke and Henry Kravis.
“Klemm is an extraordinary person in a complicated field, and she’s had as much influence on the community as any single person,” said William J. vanden Heuvel, a Litchfield resident who is chairman of the Franklin and Eleanor Roosevelt Institute in nearby
Hyde Park, N.Y. “When we arrived 20 years ago, we dined with [author William] Styron
and [sculptor Alexander] Calder and the most important cross-section of the community.
She brought an important element of community into the process of buying real estate.”
Carolyn Klemm co-founded Klemm
Real Estate with her husband.
A stream of artists like Arthur Miller and Jasper Johns and power brokers like Henry
Kissinger began buying homes in this
hilly region of northern Connecticut. What they found were acres of forests, rolling hills and a raft of grand country homes only two
hours north of New York City.
At the time, Litchfield was going through a shift as many descendants of old New England families and gentleman farmers sold off family holdings.
“Back then, you had a lot of owners holed up in the slightly decaying family mansion, clipping coupons,” said Seymour Surnow, a longtime broker for Sotheby’s in Litchfield County.
These days, buyers don’t need garden parties to see the merits of owning vacation homes in Litchfield County; the area has established itself as a kind of anti-Hamptons.
Horseback riding is an enduring feature of Litchfield County. The county has at least a dozen equestrian centers, and brokers said it’s
not uncommon for houses to have garages for cars adjacent to stalls for horses. And whereas parties in the Hamptons are seen as opportunities to show off high fashion, residents said that at social functions in Litchfield, muck boots are more common than high heels.
According to the Connecticut Multiple Listing Service, the average price for a home in the county is $797,500. Brokers said lot sizes
typically vary between four and six acres.
Brokers like to tell buyers that whereas $2 million in the Hamptons will buy a small home several blocks from the beach, the same
amount in Litchfield County gets buyers a home on several acres of lakefront property.
There is a virtual moratorium on new developments since land trusts own about 10 percent of the land in Litchfield County, according to
brokers. The mandate of these trusts is to protect views for residents, hikers and equestrians. Due to the constrictions on supply, prices
are stable.
“Inventory is not that high,” said Stacey Matthews, a broker at Klemm Realty. “We don’t get any developments, which helps keep it that
way.”
One exception is a residential community called the Club at River Oaks, which is built around an 18-hole golf course in the town of
Sherman. The development was originally proposed in the early 1990s, but local residents opposed to the plan stalled development for
10 years. Nineteen of the original 66 lots are for sale, and each two-acre lot sells for $275,000.
Brokers said sales were strong throughout the county in 2007, especially for properties above $2 million. Still, these days, second
homes are getting bought as primary homes, particularly by young families who work for financial companies in Fairfield County.