It’s perhaps no surprise that 2015—the year the U.S. Federal Reserve began to raise interest rates—was quite a good year for the luxury second-home market. In such an environment, there’s a buyers’ impetus—even if in the mind only—to close real estate deals while money is still cheap. Last year, according to our research partner RealtyTrac, the median price of second homes above $1 million on our exclusive list of 20 luxury resorts increased 11%, to $2 million, the same percentage increase for the median price of all houses in the country. You can find our second-home table compiled by Sonia Talati on page 34, complete with prices and local-market intelligence. Our survey tracks $1-million-plus single-family houses in ZIP Codes with a high percentage of second-home residences, and we rank the 20 resorts according to our judgment of their livability and value.
Drum roll, please! The top spots on our list this year go to Austin, Texas, where a softening luxury housing market offers a buying opportunity; Lake Geneva, Wis., where a long-moribund market suddenly turned lively; and Park City, Utah, where a major investment by Vail Resorts is likely to take this ski and film retreat to new heights in the coming years.
In contrast, Palm Beach, Fla., and Hanalei, Hawaii, bring up the bottom of our list. Palm Beach is overheated after another 20% median price increase, to $3.79 million. And Hanalei—which we ranked first last year, arguing that a 4.2% median-price drop offered a rare opportunity to find a dream second home—responded rather too enthusiastically to our advice. In 2015, Hanalei’s median price jumped 102%, to $2.92 million.
But back to top-ranked Austin, where the median price for $1-million-plus homes fell 5%, to $1,334,718, in 2015. Brokers at both Sotheby’s International Realty and Coldwell Banker Real Estate in Austin tell Barron’s Penta that while sales around the $1 million mark continue to close, luxury homes priced above $2 million are a hard sell. “People who like money want to hold on to their money,” says Patricia Vincent, a leading broker at Coldwell Banker in Austin. “They’re concerned about the economy.”
We think that’s a buying opportunity. Unlike many second-home retreats on our list, Austin and its brushy environs has a bright economic future, thanks to the information-technology industry that sprang up around Michael Dell.
Savills World Research, the London-based real estate advisory, tracks tech-driven cities from San Francisco to Mumbai, arguing these are some of the best cities in the world to make real estate investments, due to their above-average growth rates. Savills recently judged 12 such global tech cities on everything from “talent pool” to “quality of life” to “real estate costs.” Austin took the top spot on its list.
But Austin also has a lot going for it as a second-home destination. The “live music capital of the world” offers up not only a red-hot music scene, but also succulent butcher-block brisket, intellectual stimulation at the Art Institute of Austin and University of Texas, and bucolic hills and lakes nearby for hiking and motorboat outings. It’s also a liberal oasis in a zero-income-tax state, and urbane folks with a “downtown” sensibility will in particular be drawn to the small city’s slogan, “Keep Austin weird.”
Travis Heights is a central neighborhood on a hill that falls to the river known as Lady Bird Lake. It’s dotted by flowering gardens, handsomely updated homes from the 1920s, and sleek modernist glass boxes. The boutique Hotel Saint Cecilia would be considered cool in New York, with its music executives lounging around the pool; and in the Ignite Fitnez gym around the corner, virtually everyone younger than 35, of both sexes, is covered in tattoos and shaves their armpits. The Continental Club, meanwhile, is a short stroll away on South Congress, and when we dropped by the dive one night, local country-singer legend Dale Watson was onstage with his silver pompadour and room-filling baritone. This is a sophisticated city; a critic from the German edition of Rolling Stone leaned over the bar to give us Watson’s musical bona fides.
Jennifer Keefer of Kuper Sotheby’s showed us Travis Heights homes around $1 million, including a stylish and light-filled modern farmhouse on East Annie Street, and a 1939 farmhouse on Kenwood, tastefully restored and boasting a Zen-like yard in the back.
Stay away from certain neighborhoods in Westlake and Rollingwood, where everyone from Michael Dell to Matthew McConaughey have homes; these are year-round communities with terrific school districts and resultantly high prices, advises Coldwell’s Vincent. Those who prefer sprawling lawns, golf greens, and boat slips should instead look more to Lakeway and Spanish Oaks. But caution: Many such neighborhoods abound with steroid-pumped McMansions, built by “Dellionaires” when Under the Tuscan Sun was all the rage. Today, they look like abandoned pizzerias and make up a lot of the inventory. The best we saw is on Mount Larson Road: a 6,600-square-foot cliff-edge Italianate villa with an infinity pool and a great view, offered at $2.4 million. But our favorite property was 105 Edgewater Cove in Lakeway, a 40-minute drive from downtown Austin. The interior-courtyard bridge spans a pool; you then pass into a glass-fronted living room in cypress wood, offering up handsome views across Lake Travis. It’s a terrifically stylish three-bedroom retreat, with wine room, reduced to $1.1 million and listed with Engel & Volkers Austin.
Vail Resorts, the ski-resort operator from Colorado, has moved into Utah’s Park City, famed for its dry powder and 35-minute commute to Salt Lake City’s airport. In 2013, Vail Resorts signed a $25-million-a-year lease to operate the Canyons, one of three major local ski areas, before plunking down another $182 million to buy out much of neighboring Park City Mountain Resort. Park City is now the biggest ski resort in the U.S. with 7,300 acres of skiable terrain. It also offers value for your money. The median price in Park City is $1.46 million, comfortably below Aspen’s $3.86 million, Vail’s $2.12 million, and Sun Valley’s $1.6 million.
Park City began as a raucous 19th century silver-mining town with lots of bars and a red-light district; it now hosts Robert Redford’s Sundance Film Festival and, soon, the newly reopened and relocated Kimball Art Center. Many of its ski slopes are included in Vail Resorts’ Epic Pass program, a season ski ticket that covers all of Vail’s 12 resorts worldwide. Each spring, skiers can buy online deeply discounted passes, whose price, like an Uber surge, rises as the new season approaches. Last year, prices started at just $769, barely a third of what it costs for a single-season pass to a top area like Aspen.
Bill Ligety, a real estate agent at Summit Sotheby’s and the father of Olympic skier Ted Ligety, says that older homes in good mountain locations—but lacking “ski in, ski out” access—are usually priced at around $500 per square foot (including land) and often renovated after a sale. At the other end, new mountain homes with good ski access can run $1,200 to $1,500 a square foot.
“Mountain Modern” is the latest rage, having supplanted “Rustic” architecture and its decor of wall-mounted moose heads. The new contemporary taste is epitomized by Stein Eriksen Residences in Deer Valley, a wealthy Park City enclave that draws everyone from Mitt Romney to Dustin Hoffman. The three (out of 15) remaining Deer Valley homes, offered by Berkshire Hathaway, are priced at $6.8 million to $7.8 million. The five-bedroom, seven-bath homes have wraparound windows with expansive views, steel floating stairways, outdoor spas, laundries on two floors, radiant-heat floors, and bathrooms boasting travertine or quartz tiling. Mudrooms include personal lockers to stow gear, and they open onto the slopes.
The rapid shift to Mountain Modern style has caught some famous tastemakers off-guard. DreamWorks’ co-founder Jeffrey Katzenberg is selling his 1990s-era 10-bath home. On the market a year, the $15.5 million price is down from $20.5 million, but still a tough sell, say brokers.
We suggest that second-home buyers in the $2-million-to-$5-million price range widen their search, and incorporate more of the town’s strengths, including a free bus system, an excellent municipal athletic center, and the Town Lift that ferries skiers from a downtown square to the mountains’ base.
Old Town, Park City’s original residential neighborhood, is within walking distance of the Egyptian Theatre, a centerpiece of Sundance; the No Name Saloon and Grill, a bar “helping people forget their names since 1903”; and a number of restaurants, like the small-plate specialist Handle. Old Town homes are being taken down to the studs. In the renovated 1910 house we saw, five bedrooms and 4½ baths were somehow squeezed into a 2,825-square-foot house sitting on 1/20th of an acre. Remarkably, the three-floor home didn’t feel cramped; the kitchen was open and modern, and a wide, floating staircase led to lots of room to stow children. Asking price: $3.1 million.
More affordable is Park Meadows, a postwar residential neighborhood that’s home to estate agents and the mayor—and, increasingly, big second homes. A 4,000-square-foot, four-bedroom, five-bath home on about a third of an acre was recently on the market for $1.55 million. It definitely falls into the Rustic category but offers both the savings and the space to renovate.
The Enclave at Sun Canyon is about five miles from Park City center, a new community of 33 modern cedar-and-stone homes. A three-bedroom of 3,400 square feet starts at $2.23 million and offers Mountain Modern features on a more personal, livable scale. And for a reasonable price, homeowners can also access the nearby Waldorf Astoria Hotel, to use its spa and store ski gear and to park just a short walk from a gondola. That’s a good deal—all around.