THE temperate climate and abundant wildlife were what first drew Daysi and Jorge Morey to the somnolent coastal town of Palm Coast, Fla., a four-and-a-half-hour drive north from their Miami apartment. Now they have another reason for owning a vacation home there: rising property values.
It was only about eight months ago that the Moreys paid just under $1 million for their four-bedroom, five-and-a-half-bath house in an amenity-rich resort community, a two-minute walk from the beach. If they sold it today, they said they were told, they could get at least $1.5 million.
"I think that's still pretty reasonable for something so close to the water," said Mrs. Morey, who runs a real estate business with her husband and has seen firsthand how prices in South Florida, where they specialize, have skyrocketed over the last few years.
But Florida is hardly the only hot spot for vacation properties. Even as the rest of the residential market is cooling, second-home sales in many parts of the country - especially near the water - continue to thrive, real estate specialists say. The reasons, they say, include still-low mortgage rates and continued demand from recreation-minded baby boomers, who are flush with cash or equity in their primary residences. Many are buying with retirement in mind, while others see real estate as a stable investment.
Indeed, sales of recreational homes, which totaled 1.02 million in 2004 and 850,000 in 2003, reached record levels last year, said Walter Molony, a spokesman for the National Association of Realtors, citing preliminary results of a survey conducted last month by the association. A report with the final numbers is expected to be released next week, he said. "The demographics are very bright for the second-home marketplace," said David Lereah, the group's chief economist. He predicts that second-home sales will continue to edge up this year, with rates on 30-year conventional mortgages expected to remain below 7 percent. But he also says he believes that prices will stabilize, particularly in those hot resort areas that have attracted speculative buying.
"Those days of 20 percent price appreciation per year are probably over for most markets," he said, "and I think that's a good thing."
FEW brokers and developers, though, say that they have seen much of a falloff so far this year (aside from the normal seasonal slowdown just after the holidays).
And nowhere has the rise in second-home prices been more prevalent, they say, than with properties on or near water, where most people seem to want to be despite last year's hurricane disasters.
"You're going to pay a 25 percent premium for a view and 50 percent to be on the water," said David Hehman, chief executive of EscapeHomes.com, an online marketplace for second homes and resort properties. He puts the nationwide average price of an oceanfront home at around $1 million, about 30 percent higher than last year. (By contrast, the average price of all homes sold by real estate agents that list on his site is $355,000, up from around $300,000, he said, though that encompasses everything from tiny cottages in the woods to multimillion-dollar spreads.)
The priciest coastal areas, according to EscapeHomes.com, continue to be in California, South Florida, parts of the Northeast and Hawaii, with interest in the Big Island, in particular, growing this year.
For Diane Saatchi, a senior vice president of the Corcoran Group who specializes in the Hamptons, on Long Island, one of the hottest beach areas in the country, "the activity is surprisingly strong on the buying side."
"The feeling was that the increase in interest rates we had was going to make people more cautious about buying second homes, but so far that hasn't happened - the market seems impervious," she said. "I hear more regrets from people who have waited."
Indeed, home prices in the Hamptons are up 8 to 10 percent from last year, according to Ms. Saatchi, with the median price now at $800,000. And that actually might seem like a bargain given the ever-growing inventory of homes in the eight-digit price range there, including a nine-acre oceanfront spread in Southampton on the market now for $62.5 million. Not to be outdone, there's also a 60-acre estate in Bridgehampton for $75 million, complete with its own golf course.
Even less flashy beach communities, though, like South Padre Island, Tex. - where buyers can still pick up a two-bedroom condominium with a water view for less than $300,000 - have experienced price gains. "The appreciation has been great down here, about 10 percent," said Nathan Konopka, an agent with Realty Executives, noting, too, a steady increase in luxury developments on South Padre, in the Gulf of Mexico, like the Sapphire South Padre, a 30-story condominium just breaking ground.
Mr. Hehman and other real estate specialists say that sticker-shocked buyers have increasingly been heading to getaways in less upscale, though not necessarily less appealing, areas like South Padre Island. And while price certainly plays a role in deciding where to buy, Mr. Hehman said that "the recent natural disasters have made some people go farther up north."
Some of the most sought-after second-home destinations on EscapeHomes.com, based on Web site searches, include areas far from the southern shorelines, like Bend, Ore., and the Pocono Mountains in Pennsylvania, as well as locales just on the periphery of the so-called hot spots: Holden Beach, N.C., in the Outer Banks, about 50 miles north of Myrtle Beach, S.C.; Flagstaff, Ariz., 30 miles from Sedona; and Palm Bay, Fla., a two-hour drive north of Palm Beach. (Also on the list: perennial favorites like Tampa, Fla.; Myrtle Beach; and Park City, Utah, a ski resort.)
Diane L. Jackson, an independent broker in Flagstaff, said that people who buy second homes there, a two-and-a-half-hour drive north from Phoenix, come for the many year-round activities - hiking, canoeing and elaborate biking and jogging trails - as well as the stunning vistas, including that of the vast ponderosa pine forests of Coconino National Forest. Median home prices are also a lot lower than in nearby Sedona - about $325,000 in Flagstaff, she said, which is roughly the Sedona entry price. Small condos and manufactured homes in Flagstaff can be found in the $200,000 range.
But as word of the area's affordability gets out, finding a place there is becoming more challenging. "Every house I looked at got sold out from underneath me," said David Hall, a geologist from Levittown, Pa., who with the help of Ms. Jackson bought a three-bedroom ranch-style house on 2.5 acres, for $220,000, three months ago. He and his wife, Evelyn, are planning to rent it out and hope eventually to retire there.
Another area getting attention lately is Palm Coast, Fla., about 25 miles north of Daytona Beach and where the Moreys have their vacation home. "There's a different energy here," Mrs. Morey said. She and her husband like having the pools (there are eight) and golf course in their development, called Hammock Beach, but they are also enamored with the small-town ambience, the parks and the assorted wildlife. (Their children and grandchildren, frequent visitors to their three-story, 4,500-square-foot retreat, just love watching the dolphins swim, they say.)
Though prices are still considerably less than those in many other parts of Florida, the area is steadily shifting to a market primarily of vacation or retirement homes, and the prices are starting to reflect the change, according to Jolita Barry, a local broker at By Appointment Only Realty. Two-bedroom oceanfront condos start at about $900,000, she said, though units by the Intracoastal Waterway start at about $300,000 and are as low as $120,000 farther inland.
(Mrs. Morey said that a comparable two-bedroom oceanfront condo in Miami Beach or Key Biscayne would start at $1.2 million to $1.7 million. Some real estate analysts, though, expect prices in South Florida, which has seen extensive growth in building, to level off.)
THE trick, it seems, may be in finding those hidden gems. (Of course, there's no guarantee those areas will turn into the next Lake Tahoe or Myrtle Beach.) "The emerging markets are the fun ones," Mr. Lereah said, "because they haven't really been discovered."
At least not by many people from outside the area.
South Padre Island, near the southernmost point of Texas, has always attracted a local clientele as well as college students on spring break, but only in the last year or so, brokers say, has it been discovered by outsiders looking for affordable beach homes. Similar bargains are also available a causeway away on the mainland, in Port Isabel.
Buyers can still find two-bedroom, two-bathroom condos on the side of Laguna Madre Bay in the $200,000 range, according to Mr. Konopka of Realty Executives, though similarly-sized beachfront condos on the Gulf of Mexico cost at least double. Houses usually start at around $300,000, he added.
"We've been getting people from all over the country, as well as in Canada, Mexico and the U.K.," Mr. Konopka said. "It doesn't make any sense to pay a million when you can get the same thing for $430,000."
Robert Carnahan, an engineer from Bingen, Wash., certainly felt that way. Mr. Carnahan, who was drawn to South Padre Island for its good windsurfing and kite-boarding, said that in November he spent around $200,000 - "an absolute steal" - for a two-bedroom condo on the Gulf of Mexico in a 10-story building. He plans to use it part of the year and rent it out the rest.
Other "areas to keep an eye on," according to data provided by EscapeHomes.com, include Kings Bay, Ga., on the southeast coast; Mountain Home, Ark.; and Spirit Lake, Idaho.
Brokers in those communities say they are seeing a steady pickup in interest. For example, in Mountain Home (population 11,100), tucked deep into the Ozark Mountains, second homes made up only 10 percent of the market three to five years ago, but today it's 15 to 20 percent, said Rodney Wagner, the principal broker and owner of the Mountain Home Real Estate Company. A big attraction is the trout fishing on the White and Norfork Rivers, along with relatively low prices and low property taxes.
"We just closed on a spectacular new house - 1,855 square feet, three-bedroom, two-bath five miles west of Mountain Home - for $140,000," Mr. Wagner said.
But prices shouldn't be the only criterion for buying, said Andrew Schiller, founder and president of Location Inc., a company that specializes in relocation software and runs the home search Web site NeighborhoodScout.com.
"When people purchase vacation homes they're investing in a location as well as a family retreat," Mr. Schiller said. "It makes sense to invest in a community that has quality schools. Better quality schools will command higher values. In a lot of vacation places people do live there year-round, because of the way people telecommute with their jobs now."
Mr. Schiller has his own list of emerging-market favorites as well. They include: Blue Hill, Me.; Guilford, Conn.; Somers Point, N.J.; Carolina Beach, N.C.; Mount Pleasant, S.C.; Port St. Joe, Fla.; Oak Harbor, Wash.; Gold Beach, Ore.; and Arcata, Calif.
And then there are once-popular areas that are popular again, like the Poconos. In some areas you can buy property for less than $100,000, brokers say, although more places cost at least $300,000. "Business is brisk," said Kathleen Caponigro, an agent with Wilkins & Associates Real Estate in Mount Pocono, Pa. "The Poconos are a good alternative for people who are priced out of the Hamptons and the Jersey Shore."
Barbi Yellin of Merrick, N.Y., said that she and her husband, Reuven, who bought a four-bedroom lakefront house in the Lake in the Clouds community in the central part of the Poconos two months ago for $375,000, "absolutely did not want the Hamptons."
"It's too expensive and too much of a 'happening,' " said Mrs. Yellin, a Hebrew teacher and one of Ms. Caponigro's clients. "We wanted a neighborhood, not a scene."
Another of Ms. Caponigro's clients, Lisa Bloom, an anchor and commentator on Court TV, bought a chalet-style four-bedroom house near the Camelback ski resort about 16 months ago.
Ms. Bloom and her teenage son and daughter spend almost every weekend there - it's just a 90-minute drive from their Manhattan condo - swimming, hiking and horseback riding in the warmer months and skiing, snowboarding, sledding (and sometimes igloo building) in the winter. They also bring along plenty of guests but leave behind the P.C.'s, TV's and makeup. (Ms. Bloom says she rarely wears any out there.)
"All day long I have to talk about blood, guts and gore; it's wonderful to be able to get away from it all, and so quickly," she said.
Sometimes, of course, it's not always easy. Like the day she was scheduled to close the deal on her house. It was Nov. 12, 2004, and a jury had finally reached a guilty verdict in the Scott Peterson murder trial. "I was literally dashing off the set," she said, "trying to find all the closing papers."
