SECOND HOMES ARE DRIVING THE COVID-19 HOUSING BOOM
More Americans are buying a second home in order to have additional or alternative space to ride out the pandemic. In fact, second home purchases are driving a housing boom here in the United States, and demand for second homes is growing twice as fast as it is for primary residences. And the majority of second homes being snatched up are located in the hottest counties in the U.S. Destination resort communities like the upscale enclaves of Montecito and Santa Barbara.
Take my Elegant Eucalyptus Hill Ocean View Condo listing, pictured above, as just one example. This condo, which showcases sensational ocean, coastline and mountain views from nearly every room, is located in an enclave that offers everything one could want in a second home, namely security and conveniences like a tranquil pool, spa and guest parking.
Embracing the Condo Lifestyle
The condo lifestyle makes a perfect choice when it comes to buying a second home. They usually come with unbeatable amenities and tend to be located mere minutes from local attractions. With the ocean view condo pictured above, the new owners will also have peace of mind knowing their property is located inside a gated community. While there, they’ll be able to enjoy the peace and quiet of resort-style living without traveling too far from our beautiful beaches and local action.
Are People Fleeing from Urban Locales?
Earlier reporting that people were fleeing urban locales and heading for the suburbs is not quite as accurate as first believed. The perception that the pandemic ushered in a mass migration is not supported by the data. According to figures from two national moving companies, Americans moved less during the pandemic than they normally would have, not more. What seems to be driving the sales in the real estate market right now is second home purchases.
Owning a Second Home Can Be a Great Investment
One of the most common reasons for buying a second home is having a place that allows your family to gather and create memories. A central place for holiday gatherings or less formal get-togethers can really reinvigorate family bonds. A second home can also be a great place to retire, when the time comes. Look at it as a fantastic investment opportunity, particularly if you choose a region, like Santa Barbara, with a robust housing market.
How might you profit from owning a second home? Well, you can reap the rewards of the appreciation of your home’s value over time. Should you choose to put it on the market in the future, you may be able to profit on your initial investment. Speaking of profit, you can rent out the home when your family isn’t occupying it, thus bringing in a steady source of extra income. Ask your CPA if you could also benefit from the tax write-offs that come from the ownership of a second property.
Things to Consider When Looking For Your Second Home
If you’ve been toying with the idea of buying a second home, now is the perfect time to do it. Whether you’re dreaming of paradise or profit, follow these four steps to a smart investment:
1) Scout the market
Join the millions of people searching the web for a second home sweet home. Realtor.com shattered its traffic records this past June, and Zillow’s traffic for sale listings is up 41% since 2019. Existing home sales have hit a 14-year high, meaning more people are buying houses right now. The fact that many listings include a video tour, 3D tour, or both helps homebuyers make a decision prior to taking an actual tour. A video walkthrough is crucial as we continue to practice social distancing, and experts say the trend is here to stay.
Once you have a good idea about the market, take the next step to start the search for a second residence and find a real estate agent to work with. In Santa Barbara and Montecito, that agent is me. If you’re searching for a second home outside the Santa Barbara area, be sure to take note of the agent’s track record, because this can tip you off to superstar agents. By checking their testimonials, you can figure out whether they’re a fit for your needs.
So, if you’re searching for a second home in Montecito, Hope Ranch or any of Santa Barbara’s upscale communities, I’m here to help. As a resident myself, I can help you evaluate the location and amenities of a property and provide information about comparable sales.
And, with more than 25 years in the industry and an eye for the long-term value of the property, I’ll also fill you in on historical prices and how comparable sales have fared, as well as resale prospects.
2) Gauge your return
Second-home buyers nowadays are more geared to enjoying their property rather than flipping it for a quick return on investment.
Still, you should consider that you will be away from the property much of the time and factor in additional maintenance costs, such as having a management company check for water leaks or frozen pipes.
3) Insurance considerations
Getting insurance for a second home may be more challenging than for a primary residence, depending on location. Typically, your second home is located farther away, and insurance companies might be concerned the home will not be properly maintained.
Having a separate policy specifically for your second home is usually a smart move. Your vacation home or second home will likely have some insurance hazards your main residence doesn’t. By creating a separate policy for this dwelling, you can tailor coverage options that make sense for your unique circumstances.
4) Learn the tax ins and outs
Savvy tax planning can make a difference in your return on a second home. Tax implications for second homes can vary significantly based on your financial situation and whether or not you plan to rent out the property.
Keep these points in mind when figuring the impact on your taxes:
• Consider property taxes, utilities, homeowners association fees and other applicable expenses.
• Generally, the interest on the mortgage of your second home is tax-deductible, and rental properties are subject to additional tax breaks. The deductions of a rental property come in an array of possibilities, including depreciation of the real estate itself and a separate, accelerated depreciation of personal property such as furnishings. Owners only have to use the property two weeks a year to get certain tax benefits on rentals.
Once again, I urge you to check with your CPA or tax attorney. If you’re interested in buying a second home in any of Santa Barbara’s upscale communities, I hope you’ll consider working with me. Just give me a call at (805) 886-9378 or email me at Cristal@montecito-estate.com.