News & Politics

Living in Your Dream Vacation Home

Thanks to low interest rates and good prices, these couples took the plunge and bought the vacation homes they’d always wanted.

Richard and Laura Ward paid $690,000 for this home in Oxford, Maryland—$305,000 less than the original list price. Photograph courtesy of Laura Ward.

Jane McCarthy and her husband, Stephen, used to spend their weekdays counting the hours until they could escape DC and head out Route 50 to their house on Maryland’s Eastern Shore. “As soon as we crossed the Bay Bridge, my stomach would settle,” says Jane. “I felt like a new person, revived and rejuvenated.”

The McCarthys now live year-round in Oxford, Maryland, where Jane, a real-estate agent, works often with Washingtonians searching for retreats. The past few years have been tumultuous, she says. First, prices skyrocketed, then the bubble burst—by 2010, the number of vacation homes sold nationwide had fallen by almost 50 percent from their peak in 2006. “Second-home buyers were definitely scarce,” says McCarthy. “Buying a primary home was tough enough.”

Although prices in many popular resort areas are still falling, agents and lenders say the market is showing signs of recovery. In Virginia’s Rappahannock County, the number of homes sold climbed by almost 15 percent from 2010 to 2011. Homes in some areas are also selling faster—in Maryland’s Garrett County, they sat on the market an average of 208 days this past November, a drop of 26 percent from the same month in 2010.

Bill McGuire, a lender for First Home Mortgage in Easton, says that historically low interest rates and low prices have finally begun to lure buyers: “A lot of our clients had been looking casually for several years but were too afraid to jump in. They’re realizing that now may be the time to buy.”

New lending regulations make it hard to qualify for a loan, and lenders are requiring bigger down payments—usually a minimum of 20 percent. But it’s not impossible, says McGuire: “The misconception is that you can’t get a mortgage on a second home, and that’s just not true. Is qualifying harder than it used to be? Absolutely. It’s practically open-heart surgery. But once you do, you’re set.”

We tracked down three Washington families who have recently bought a vacation home. Here’s how they made it work.

Strategy One: Don’t Be Afraid to Low-Ball

Buyers: Richard and Laura Ward of Frederick.
Wish list: A family-friendly house on the water that could become a primary residence in the future.
Budget: $700,000.
List price: $995,000.
Purchase price: $690,000.

For years, Richard and Laura Ward kept their 38-foot Saber motorboat in a slip in Annapolis and spent as much time on the Chesapeake Bay as their harried schedules allowed. In 2007, they began storing their boat in Oxford, Maryland, during the winter. “We knew we wanted to end up there,” says Laura. “The idea of being right on the water in such a sweet, quiet town was exciting.”

The Wards—who also own homes in Annapolis and North Carolina’s Outer Banks—had been casually looking for an Eastern Shore house for a few years when a waterfront farmhouse with a red door hit the market in November 2010.

“Although it was perfect, it was a little more than we wanted to spend, so we kept looking,” says Laura. Another buyer made a bid for far less than the asking price, so the Wards decided to make an offer as well. “In the end they accepted ours, as it wasn’t a contingency offer,” she says. “We ended up getting the house for way less than we had expected—and definitely sooner than expected.”

With prices around the region the lowest they’ve been in years, real-estate agents say people are snapping up bargains with the intent of retiring in the homes later. According to the National Association of Realtors, more than a third of vacation-home buyers in the last year plan to use it as a primary residence later. “Waterfront properties in this area are selling for 30 percent less than they were in 2007,” says Jane McCarthy, an associate broker with Benson & Mangold Real Estate.

The Wards say their long-term plan is to sell their other properties and live year-round in Oxford. For now, they’re content to visit during summers and on weekends with their nine-year-old twins, who enjoy searching for sea glass along the shore and riding their bikes around town. The only drawback? Their son’s newfound love of sailing. Says Laura: “We might have to look into a sailboat.”