You can own the whole thing or just a piece of it. Vacation homes are everywhere — in the mountains, in the city and from sea to shining sea. And there is evidence that after a six-year lull, sales of vacation homes are finally starting to gather steam.
Time-share sales were up 2.4 percent in 2011 and 14.1 percent, year over year, in the first quarter of 2012, according to the American Resort Development Association.
While the uptick in 2011 was "nominal," says Richard Ragatz, who heads the consulting and research firm that bears his name, "a significant number of developers said that sales were better during the second half of 2011, giving the impression that the bleeding has finally stopped and we may be turning the corner."
If you haven't been in the vacation property market for a while, here's what you'll find:
Whole ownership. According to the Census Bureau, there are about 8 million vacation homes — recreational property purchased for personal use — in practically every burg and hamlet nationwide, and in some major cities too. (The total does not include the uncounted millions of vacation homes available worldwide.)
The choices are myriad. You can buy a small cabin in the woods, a retreat on the slopes, a beach bungalow or a condo in Gotham. The prices also range considerably, as do the headaches.
No one uses your place but you and your guests, which is usually a positive. But you pay for all the upkeep. And you pay for all the downtime when the house or apartment isn't being used.
Time shares. More than 8 million people own a week or two at their favorite resorts. What's more, 42 percent of last year's time-share buyers were repeat buyers who were either adding to their weeks or moving up, perhaps to larger units or to more lavish properties. That's a sign that despite the negative press, at least some people enjoy time sharing.
According to the American Resort Development Association, there are more than 1,500 time-share resorts with a total of nearly 195,000 units. As with location, time-share prices are all over the map. But sharing the same unit with 51 other owners is usually the least expensive way to own a vacation home. The average price per week was just over $15,000 in 2011.
Better yet, most resorts belong to exchange banks, where you can deposit your week at your home resort and take out time in a comparable spot elsewhere. So, as much as you may love your place, you are not stuck in that one spot every year. The amount of time purchased often is now expressed in "points" as opposed to weeks, allowing even greater flexibility.
On the other hand, time shares are a lousy investment. That's why they are sold as a hedge against inflation, or "vacation insurance." And they are difficult to resell, even at less than what you paid.
There is some evidence that developers are starting to embrace resales, which have been a black eye on the business. According to a survey by industry publication Perspective, two-thirds of respondents said developers need to create in-house resale programs, and 72 percent said resale information should be included in the original sales presentation.
Fractionals. These are upscale versions of time-share resorts, where you buy larger interests, typically in four-, eight- or 12-week chunks. Prices are also higher — the average last year was $131,000, according to Ragatz — and so are the monthly carrying costs, which can be hefty. But you get more usage and better exchange possibilities.
Private residence clubs. These are more luxurious yet — and more exclusive. The clubs offer fully deeded fractional ownership with all the services and benefits of a five-star hotel. As with other forms of shared ownership, you pay for only the time you actually need, typically three to six weeks. The average price: $254,000 per share, with annual fees averaging $6,650. There may be no more than 300 private residence clubs worldwide.
At The Palms on Costa Rica's Pacific coast, the 33 two- and three-bedroom oceanfront town houses are being marketed as a mixture of full ownership and fractional ownership of one-eighth or one-tenth interests. A combination of whole ownership/private residence club is something many of the major properties are offering these days, sales manager Mark Randall said.
Whether you buy the entire unit at The Palms for $1.1 million or an eighth of one for $129,000, you get all the services, including the ability to trade places with owners in other properties. Obviously, full owners can visit anytime they like. But part-timers can usually grab five to six weeks or more, depending on availability and how flexible they can be.
"There's no arbitrary limit on use, and owners are not penalized for how long they stay," Randall said.
Destination clubs. Fewer in number — only six responded to the annual Ragatz survey — destination clubs give members access to a collection of vacation homes worldwide. The average membership fee: $273,000.
Consistent with other types of interval ownership, clubs offer different levels of reservation priority, personalized services and amenities, such as spas and private chefs.
Similar to membership choices available at country clubs, buyers can choose between equity or nonequity clubs. Either way, you get to enjoy all the benefits.