Although Montana has remained relatively unscathed by the coronavirus, Big Sky real estate agent Michael Pitcairn said the virus still managed to slow the vacation town of 2,308 down to a grinding halt.
“We’re a second home market, so I think we’re a bit different than primary home markets,” Pitcairn told Inman. “Nobody needs to buy a house here.”
“It’s more of a want, so we’ve seen transactions not stop completely, but we’ve probably had an 80 to 90 percent reduction in properties going under contract,” he added.
Pitcairn and his team at L&K Real Estate specialize in selling condos with scenic views, rustic single-family homes perfect for Christmas ski vacations, luxury ranches, and expansive lots for future builds. Most of the brokerage’s current listings are more than $1 million, with the most expensive listing costing $6.95 million.
Although Americans at all income levels are slashing consumer and non-essential spending as the possibility of a recession looms near, Pitcairn already sees the light at the end of the tunnel for second-home markets like his.
“We might see a shift in where people might want to live,” he explained. “I’m hoping that if people are successful [in] working from home, that they’ll want to live in Big Sky.”
“We have fiber internet here in Big Sky and its super-fast,” he added. “We’re hoping that some people decide, ‘Hey if I can work remotely, I might as well live in an incredible place where I have recreation right outside of my door, and the quality of life is better than living in a city with millions of people.'”
“We’re kind of hoping there might be a shift where we’re bringing more full-time residents to our market,” he concluded. “We’re thinking that during this quarantine time people will reevaluate what’s really important to them and if work permits, work remotely in a place like Big Sky.”
Pitcairn isn’t the only real estate agent to see opportunity in the midst of great uncertainty — Daniel Collins of Realty One Group Mountain Desert in Lake Havasu, Arizona, said his team is expecting a similar result as shelter-in-place restrictions are lifted.
“We have a pretty seasonal market in general,” Collins said. “In general, we’re still pretty strong, although we’re seeing a slowdown and some challenges like any market would due to showings.”
“Some people are postponing their trips, but we haven’t seen anyone who said they’re not going to buy,” he added.
Collins said Lake Havasu is becoming an increasingly popular market for Californians who want a quiet place to vacation or are looking for a permanent reprieve from the hustle and bustle of life in places like San Diego, Los Angeles or San Francisco.
“California is on the other side of the lake, and people that come to Lake Havasu are transplants from California,” he said. “Some people are retiring early, selling their main home and coming to Lake Havasu to live in their second home.”
“We’ve been seeing more and more of that, even before the coronavirus,” he continued. “I suspect that trend could become stronger, especially for Californians who didn’t like how the state handled the coronavirus.”
“They could say, ‘I’m tired of living in a big city with all this density and high taxes’ and come to Arizona.”
As evidence, Collins said his team’s internet searches and phone inquiries have increased over the past two months with buyers saying they’re ready to move as soon as the pandemic ends — a trend that’s emerging in New York City, according to a Wall Street Journal feature about buyers anxious to flee the city.
“When this shakes out, whenever that is, there will be pent up demand,” he explained after adding Lake Havasu is experiencing a residential building boom. “People want to go somewhere where there’s warm weather like Arizona.”
“They’ll be tired of being inside and Lake Havasu has a beautiful lake and weather, the cost of living is relatively inexpensive, and Lake Havasu is a great resort town,” he concluded.
Although Pitcairn and Collins have already identified their silver lining, At The Beach Real Estate’s John Moran is still focusing on the growing cloud over Destin, Florida’s market.
“The beaches are closed. Then they suspended vacation rentals,” Moran told Inman. “Those [two things] are bad news for our little world here. We depend so much on vacation rentals over Spring Break or the summer.”
“That is a massive impact on the rental market and the second-home market,” he added.
Unlike Lake Havasu and Big Sky, Moran explained that much of Destin’s vacation homes are owned by small-time investors who count on spring and summer traffic to provide enough income to power them through the rest of the year.
“We have so many folks that come here and vacation and then we have homeowners who own vacation rentals that are put on VRBO and they hire property managers,” he said. “So, these second homes are seen as investment properties. Thousands and thousands of people own these properties, rent them out, and maybe only use them once or twice a year.”
Moran said his worries about the future are mounting, with investors and small business owners who rely on vacationers considering their options if sheltering-in-place extends into the summer.
“Spring Break is already gone. If people miss May, June, and July rent, a lot of people who thought they could count on that rental income are going to be in a hard spot,” he explained. “They may even be forced to sell. So we’re thinking prices are going to drop.”
Home prices are still on the rise in Destin according to Zillow’s latest market snapshot, but a number of listings on Moran’s website have had their prices slashed.
“The sharks are circling because they think homeowners are in distress, but they’re not yet,” Moran concluded. “We’re still hoping things will change.”