- The Washington Times - Friday, August 18, 2000

Thinking of buying a second home but put off by rising interest rates? Unsure of where to buy? Unclear about the process? Rest easy. Whether your tastes run to the mountains or the beach, involve a season's stay or just weekend getaways, the Washington area offers vacation homes in nearly every price range.
The second-home market continues to make a strong showing despite rising interest rates.
"This has been a very active year for us," says Ruth Seib of Coldwell Banker Deep Creek Realty in Western Maryland. "We've had a very large number of sales this year."
It's the same at North Bethany, Del., where Tidewater Realty's Ann Raskauskas brokers top-of-the-line homes for beach lovers from the extended Washington area.
"Our market just keeps getting stronger," she says. "We've got a little supply, but a lot of demand."
The vacation-home market always has been subject to fashionable cycles. Think of the Catskills, where the landscape is cluttered with the detritus of a once-thriving industry. This year's hot hit is next year's cold commodity, hard to maintain and even harder to unload.
That's why it's important to check for a stable growth pattern in the area where you are considering buying or building a second home. Both Deep Creek Lake and Bethany Beach are among this area's most popular destination spots. Careful planning in both places has prevented the kind of uncontrolled development that has occurred in other areas.
In fact, many second-home buyers are already familiar with the vicinity where they purchase. They have spent years as renters in the same place.
"A lot of our home buyers originally started renting places here," Mrs. Seib says. "They loved it so much they decided to go for something of their own."
The same is true of Bryce Resort in Virginia's Shenandoah Mountain. Bryce, which features ski slopes, a 46-acre lake and an increasingly popular 18-hole golf course, is a two-hour drive from Washington.
"People come on a ski package or a golf package and like it so much they decide to buy," says Richard Armell, broker and manager of Creekside Realty. "And we've got a lot of people who buy because they're planning to retire here."
At Bryce, which markets itself as providing "affordable" vacation homes a 2,000-square-foot, three- or four-bedroom house sells for $140,000 to $180,000 Mr. Armell says he has seen sales drop off in the past 30 to 45 days.
"I wanted to blame it on interest rates, but I really don't think that's a deterrent," he says. "I think the stock market has a lot to do with people's willingness to take a risk and buy something."
So why buy rather than rent? For one thing, you have a place you can call your own.
"You don't have to worry the same way you worry if it's not your house," says one second-home owner who asked not to be named. "You can relax more when it's your own place."
In other words, you can pack the children and their friends into the house and not worry about destruction of any property other than your own. You also can bring the dog.
"Most rentals won't allow you to bring a dog," continues the homeowner. "We ended up missing our dog more than we enjoyed the vacation."
There are other creature comforts besides. Today's vacation homes offer more square footage and more amenities than ever before. Forget the drafty bungalows and jerry-built fishing shacks of the past. Where once there were "camps," now there are condos, gated communities with private beaches and, of course, central heating and air conditioning.
"As time went on, people put more and more money into second homes," says Mrs. Seib, who remembers that Deep Creek Lake got its start as a weekend place for vacationers from Pittsburgh. Seasonal cottages of cement block or chestnut logs dotted the woods around Deep Creek Lake, a state-owned property with 60 miles of shoreline and a buffer strip of land that helps preserve its bucolic appearance.
If yesterday's back-to-nature movement meant rude accommodations and mean living, today's vacation homes bring the outdoors in, with glassed-in areas that offer stunning views of sea, sky or mountains. At Bryce Resort, mountain chalets offer upstairs lofts. In North Bethany, reverse-floor-plan houses shift bedrooms downstairs, leaving the upstairs open for a single "great room," the better to appreciate ocean views. Housing prices in this area of Delaware routinely top $1 million, although Miss Raskauskas notes that town houses can be had in the $100,000 range.
With 30-year fixed-rate mortgages hovering at about 8 percent, the effect of rising interest rates on sales of second homes has been fairly negligible, according to most Realtors.
"Eight and a quarter percent for a typical mortgage is not a number where people flinch," Mrs. Seib says, "and that's particularly true for second-home buyers."
Mrs. Seib says many of the second-home purchases at Deep Creek Lake are made with cash after the home buyer has liquidated investments or other assets.
If a buyer needs a mortgage, obtaining one has never been easier, whether the property being bought is a multimillion-dollar estate or a $140,000 town house.
"In the past four to six years, it has been much easier to get a mortgage on a second house," Mrs. Seib says. "Lenders often offer the very same rate programs as they do for primary-home buyers."
Along with the size of your budget, the choice of a second home has much to do with lifestyle. While you may not have to worry about your house's proximity to school or work, you may want to take into account the nearness of your neighbors and also the area's recreational or cultural activities.
One family quickly put their mountain hideaway back on the market after finding it just a little too hidden.
"The view was amazing," says the former homeowner, who also asked not to be named, "but there was nothing to do and nowhere to go. After a while, I thought we were going to go stir-crazy. I didn't want to end up hating my kids, so we sold the place."
Things are more congenial at North Bethany, with nearby neighbors and room enough in its large homes for extended families. In fact, Miss Raskauskas notes a trend this year for purchases to be "true" second homes, not properties bought for investment purposes to be rented out during the height of the season. If you are looking for an active beach scene with late-night action, however, North Bethany probably is not the place for you. Things tend to shut down rather early.
"People say we're built for the newly wed or nearly dead," Miss Raskauskas says, "but I would say we're really a family place."
For buyers seeking to augment their income or at least cover the mortgage on a second home, renting it out seems to be a clear option. Of course, that means that for all or part of the peak season, you and your family will have to find someplace else to live. One Delaware beach homeowner actually ended up buying a third home because the second property was always rented out.
Unlike a car or boat, most real estate tends to appreciate. It can be hard to overlook an opportunity to make a little money.
"A lot of people buy just to put their home on the rental market," Mrs. Seib says. She estimates that at Deep Creek Lake, "a majority" of homes are rented out at some time or another.
"Most don't bother treating it as an investment property even if they rent it out for part of the time," she says. "Besides, you can still deduct the mortgage."
Too much rental time means a second home is no longer a vacation home, but an investment property. If you want to claim it on your tax return, there are requirements regarding how much time the owner can spend there.
"I always tell people that I don't believe they would make enough renting out the place to cover the mortgage," Mr. Armell says. "The majority of our buyers are using the homes themselves."
Whether they buy in the mountains or by the beach, a "true" second home or a part-time rental, a million-dollar architectural extravaganza or a bare-bones condo, most Washington area second-home owners interviewed for this story seem to agree on one thing:
"I thought we'd have more time here," says one Bethany Beach homeowner, echoing the comments of others, "but we're so busy, it seems that we just can't find the time to get away."

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