Equifax

Finance Blog

Is Now the Right Time to Buy a Vacation Home along the Gulf of Mexico?

Written by Ilyce Glink on August 13, 2010 in Real Estate  |   2 comments

Is Now the Right Time to Buy a Vacation Home along the Gulf of Mexico? Week after week, the Gulf oil spill drama has dragged on, dragging down the fortunes of millions of residents and small-business owners with it. Meanwhile, Ken Feinberg, who oversaw the…

Vacation home purchase- items to considerIs Now the Right Time to Buy a Vacation Home along the Gulf of Mexico?

Week after week, the Gulf oil spill drama has dragged on, dragging down the fortunes of millions of residents and small-business owners with it.

Meanwhile, Ken Feinberg, who oversaw the 9/11 fund payments, has been appointed pay czar for the Gulf oil disaster, with the goal of making sure more victims are paid more money on a timelier basis. The federal government has billed BP $100 million for cleanup costs, and Michelle Obama recently visited the area to show off how many beaches have not (yet) been spoiled by oil and tar balls.

Tar balls or not, if you own a primary or vacation home anywhere along the eastern half of the Gulf, you have to be worried about the long-term implications of the Gulf oil spill:

  • Gulf Coast homeowners say vacation bookings are down sharply from a year ago.
  • Property prices are falling as fewer buyers are considering purchasing property along the shoreline.
  • Foreclosures are mounting as vacation homeowners struggle to make payments in the wake of cancellations.
  • Tourism dollars in states along the Gulf have shrunk, even as states spend millions of dollars promoting themselves.

That’s a lot of negative news, and indeed, some buyers are staying away. However, the contrarian in me wonders if now is the right time to buy a vacation home along the Gulf of Mexico.

Whenever you go into a troubled location, you have to be careful. Here are a few things to think about:

What is the timeline for your investment? After Hurricane Andrew struck South Florida, in 1992, it took nearly a decade for the area to rebuild and get back to normal. The Gulf states, and in particular New Orleans, are only now beginning to recover from Hurricanes Katrina and Rita. If you make this investment, think about the timeline in terms of decades.

Will this purchase stretch you financially? Are you concerned about your job security? Or do you feel like you have a lot of extra cash to play with? In uncertain economic times, you don’t want to push yourself to the brink financially.

Do you need a mortgage? If you pay with cash, then you’ll only have to worry about real estate taxes and insurance. If you need a mortgage, and you’re counting on renting the property to cover some or all of your expenses, you’re more susceptible to fluctuations in vacation traveler demand. Also, if you need a mortgage to purchase the property and you’re buying in a building that’s full of foreclosures, the property may not even qualify for financing.

Can you purchase a quality property at a rock-bottom price? There will be people whose instincts tell them to flee at the first sign of trouble. That means there could be an excellent long-term investment just waiting for a savvy buyer. Find out what property is worth today, post-spill, and then negotiate for a price you feel reflects the risk you’re willing to take.

Remember: just because a piece of property is cheap doesn’t mean it’s a good deal. To really determine if now is the right time to buy property on the Gulf Coast, you’ll have to pull out your pencil and paper and start crunching numbers.

Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.

READ MORE:
The Best Way To Value Investment Property
How to Find a Great Real Estate Agent
Will the Real Estate Summer Slowdown Mean Lower Prices?
No More Home Buyer Tax Credits: Is Now a Good Time to Buy a House?

2 comments

  1. ForgottenGulf.com says:

    Ms Glink,
    Ms Glink,
    All good points and important caveats when purchasing property along the Gulf Coast. Some areas have been heavy impacted by oil on the beach and others have mostly been the unfortunate recipient of more bad press than oil. Our little island, Dauphin Island has been the site of many a LIVE report but has had minimal direct oil impact. The same is true for Panama City Beach and even more so for St George Island. But, we have all been hugely impacted this year with rental cancellations based on the negative hype.
    With the capping of the well we immediately started seeing calls about rentals and sales pick up. At my personal vaca home on Dauphin Island I now have 4 weeks booked for Summer 2011. People's memory is short lived and most of our beaches are still clean and white.
    The Gulf is quickly being re-opened fishing, a charter company out of Panama City Beach is already having to turn away inquiries due to a full reservation calendar.
    Before the oil spill we were seeing a big upsurge in demand. Multiple offers started coming in again on market priced properties (homes and lots). So I believe a buyer (especially a cash buyer) is in a perfect situation for the astute buyer to find some good deals all along the Gulf Coast. Whether in Alabama or Florida Gulf Coast beach towns the inventory is high and the prices are at historical lows.
    One thing to consider, if buying a home for cash have the seller arrange with the Flood Insurance carrier to TRANSFER the coverage. This can be critical as Flood Insurance can be a gotcha in the current market.
    Marion Laney
    Realtor w/ACP Real Estate (of course)on Dauphin Island but formerly active on the Emerald Coast of Fla.

  2. Ilyce Glink says:

    Marion:

    Thank you for sharing your experiences on Dauphin Island.

    The negative hype, which President and Mrs. Obama tried to counteract with their visit to the Gulf last week, has had a direct impact on the number of visitors and the number of buyers looking to purchase property.

    I'm glad to hear that calls have started to pick up now that the well is capped. I heard a great statistic that all of the oil would fill a small percentage of the New Orleans Football stadium and you'd need 400+ million football stadiums to hold all the water in the Gulf.

    And, great advice about making sure the Flood insurance is transferable – especially with the 5th anniversary of Katrina coming up August 29.

    Appreciate the comment.


Leave a Comment


Name :


Commenting guidelines

We welcome your interest and participation on this forum, but be aware that comments will be published at Equifax's sole discretion. Please don't use this blog to submit questions or concerns about your Equifax credit report or raise customer service issues. Instead, you should contact Equifax directly for all such matters and any attempts to do so in this forum will be promptly re-directed.

Some other factors to consider when commenting:
  1. Registration and privacy. While no registration is required to visit our forum, participants wishing to post a message must register by creating an account. All personal information provided by forum members incident to registration is governed by our Terms of Use and Privacy Policy.
  2. All comments are anonymous. We'll delete your name, e-mail address, and any other identifying information, including details about your investments.
  3. We can't post or respond to every comment - As much as we'd like to, we can't post every comment, nor can we guarantee that we will respond to each individual message. All questions or comments about your Equifax credit report or similar customer service issues should be handled by contacting Equifax directly.
  4. Don't offer specific legal, tax or financial advice. All of the materials on this Site are for information, education, and noncommercial purposes only and this forum is not intended as a means of expressing views or ideas regarding any specific legal, tax, or investment advice. While offering general rules of thumb is both permitted and encouraged, recommending specific ideas or strategies regarding investments, taxes, and related matters is prohibited.
  5. Credit Repair. This blog is not intended as a venue for the discussion or exchange of ideas regarding credit repair or other strategies intended to assist visitors and community members improve or otherwise modify their credit histories, ratings or scores.
  6. Stay on topic. Your comment should be concise and pertain to the specific post in question.
  7. Be respectful of the community. The use of profanity, offensive language, spam, and personal attacks will not be tolerated and egregious or repeat offenders will be banned from future participation. We encourage disagreement and healthy debate, but please refrain from personal attacks on our WordPresss and contributors.
  8. Finally: Participation in this forum may be terminated by Equifax immediately and without notice for failure to comply with any guidelines or Terms of Use. As such, you should familiarize yourself with all pertinent requirements prior to submitting any response through the blog or otherwise. All opinions expressed in this forum are solely those of the individual submitting the comment, and don't necessarily represent the views of Equifax or its management.

Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.


Real Estate Archive

Stay Informed Sign up for our FREE Equifax email Newsletter