By Mike Peterson
A season is a time characterized by a particular circumstance.
An opportunity is a favorable juncture of circumstances.
Value is a relative worth in relation to price.
A cycle is a process that returns to its beginning and repeats its same sequence.
Why the dictionary lesson? Well, since winter ended I’ve been enjoying the unbelievably nice weather and also seeing the effects of these principles at work. The first piece of evidence I got this week is that my two favorite golf courses are opening early – The Legend and The Quarry, @ Giant’s Ridge in Northeastern Minnesota.
The opportunity is that since the snow melted so fast the courses are open a month early. So the management wants to do everything possible to get people to play some extra rounds this season. The Legend and Quarry promo is only $45 for 18 holes or $75 for 36 holes for any day between now and April 26th. (See www.GiantsRidge.com for details.)
This would be a great price for your local duffer’s course but when you consider that Golf Digest rated Giants Ridge “One of the Top 75 Best Golf Resorts in North America” and Golf World crowned Giants Ridge “One of the Top Six Golf Destinations in the World”, then you know this is a freakishly good value.
Real Estate Value
The second piece of evidence of opportunity I got is the great activity that I am seeing in certain segments of the real estate industry.
Nowhere is this is as obvious as the vacation home market. Over the last 4 years the world changed fundamentally – and so did the mindset of the vacation home buyer. Most buyers today are more cautious about discretionary purchases. Many households have less net worth, less cash and less credit available for 2nd homes. People are concerned that prices may drop further. We are all looking for VALUE.
All of these factors have led to a new normal in the vacation property market. And despite the fact that mortgage financing is at historically low rates, the reason people still don’t buy vacation property comes down to three things:
- Price – because they still don’t believe it’s affordable.
- Usage – because they know they don’t have the time to use it enough. (avg. use 4 weeks / year).
- Variety – because they are pretty sure they don’t want the same vacation over and over again.
So for those who can overcome these objections there is a large market of eager owners.
Real Estate Cycle
The third piece of evidence came this month when Dick Ragatz released his 2012 report on Fractional Industry Growth. Ragatz Associates is the international authority on shared ownership real estate. His firm has worked in 48 states and over 70 countries studying the changes that are constantly occurring in the vacation real estate marketplace and in our society.
The survey revealed that there are currently some 305 fractional interest (FI) projects and private residence clubs (PRC), plus six destination clubs.
According to Ragatz, “The key finding is that total sales volume in 2011 was about $552 million, a slight increase from $530 million in 2010. While this increase is nominal, it represents a four percent gain. We also learned that a significant number of developers said that sales were better during the second half of 2011 than in the first half, giving the impression that the bleeding has finally stopped and that we may be turning the corner.”
“[It] is widely felt in the resort real estate industry that the shared-ownership components will strongly rebound in the future. This thinking is based on personal use [of the property by the buyer] instead of speculation, being able to purchase only the amount of time [that the buyer will likely use], while leaving more discretionary funds for other household spending….”
The complete report is available for purchase at www.RagatzAssociates.com.
Voyageurs Retreat at Giants Ridge
So call the Giants Ridge hotline too and reserve your tee times. And after you play a round of golf at The Quarry, take a right turn at the edge of the parking lot and follow the signs to check out the fractional ownership model home at Voyageurs Retreat (or visit www.ILoveVR.com). It’s the right season. It’s the right value. And for some, maybe an opportunity that begins a new cycle.
Mike Peterson is the Broker/Owner of Fractional Realty LLC. He can be reached at firstname.lastname@example.org or 612-226-7467.
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