More see need for home away from home
By Tomoeh Murakami Tse
By Tomoeh Murakami Tse
WASHINGTON — Film producer Randy Auerbach just bought a one-bedroom condo here that will serve as an East Coast bookend to her cottage near Beverly Hills. Babak Fouladi, a George Washington University alumnus, added a condo here to go with his flat in London. And Mark Goode, head of an insurance investment firm, plans to buy something in Georgetown but isn't quite ready to give up his place in Miami Beach.
What's going on? Isn't investing in real estate passe, so 2005?
Auerbach and the rest aren't speculators angling to make a quick profit amid a tapering housing boom. They are part of a growing group of second-home owners in a real estate market teeming with affluent baby boomers — and they plan to use the properties themselves as pieds-a-terre.
A pied-a-terre, French for foot on the ground, is usually a smallish home away from home, owned by someone who wants a city place to live in part time.
About 3.34 million nonprimary residences were sold nationwide last year, accounting for 40 percent of all homes sold, according to a report last week by the National Association of Realtors. That's up from 36 percent in 2004 and 33 percent in 2003.
Vacation homes, for use primarily by their owners, made up a third of those second-home purchases. Generally, pieds-a-terre would be lumped into this category. The rest were investment properties acquired mostly to generate rental income or diversify portfolios.
The market for the latter, most economists agree, will cool drastically in 2006 as interest rates tick up and the double-digit gains in home values seen in the past five years come to an end. On the other hand, David Lereah, chief economist for the trade group, and others say sales of vacation homes will remain strong, and possibly cushion market downturns. Vacation home sales were up 17 percent in 2005 from the previous year, to a record 1.02 million properties, the report said. The median price — half cost more and the rest less — for vacation homes was $204,100. For investment properties, it was $183,500.
"The vacation home market has a very powerful demographic tailwind," said Mark Zandi, chief economist of Economy.com.
A taste of the urban life, real estate agents said, is at the top of the list for many second-home buyers.
"What people seem to want in pieds-a-terre is proximity to entertainment, shopping and dining ... or the potential for that in the future," said Jeff Sachse, of Coldwell Banker Residential Brokerage here.
What Mark Goode mostly wanted was a peaceful place to come home to — so far this month, he has traveled to France, Germany, Switzerland and Argentina.
"It's just nice not to have to pack and unpack, to be able to get off the plane and be in your own bed at night," said Goode, who used to stay in hotels during his twice-weekly trips to D.C.
Goode, 45, has been testing out a two-bedroom, 2 1/2-bath unit in a Georgetown condo building two blocks from the office of Secondary Life Capital, an insurance investment company he founded in 2004. He spends about three nights a week there, and plans to buy it at year's end.
Like his primary residence, a high-rise condo in Miami Beach, the building is near the water and boasts spectacular views. Instead of the ocean, his D.C. home looks out to the Potomac River and suburban skyline; the rooftop pool offers views of the Washington Monument.
"It's very secure, and very hassle-free — everything is taken care of," Goode said. "You can close the doors and leave for two weeks and not think about a thing."