Eighth is enough
Vacation-home owners share the cost
New vacation homes are being built slope-side at Schweitzer Mountain Resort, with three bedrooms, 3 ½ bathrooms, large decks and picture windows offering dramatic views of Lake Pend Oreille, all beckoning the discerning buyer.
These million-dollar homes are going for only $195,000.
That’s per share. A one-eighth share to be exact.
These homes are among the first in the Inland Northwest to be sold under a fractional ownership plan. That $195,000 guarantees each owner the right to use one of the MountainSide homes for four weeks during winter and summer, with additional time available during shoulder seasons.
Research shows that’s the average amount of time most people who own vacation homes spend there anyway, said Michael Burns, a fractional ownership expert who is a consultant to the Schweitzer-owned development.
In this difficult economy, Burns said, this lower-cost option might appeal more to people not ready for full ownership of a vacation home.
“Fractional ownership is an alternative to buying a second home,” he said.
His company, Private Residence Resorts, developed fractional ownership projects in Sun Valley and McCall, Idaho. Both projects are sold out and have experienced about two dozen re-sales, Burns said.
“You actually get deed and title to a one-eighth interest,” he explained. “You own that in perpetuity or as long as you want. You have all the rights and privileges of real estate ownership.”
Fractional ownership of real estate has been around at least a decade but just now is arriving in the Inland Northwest. Though Spokane real estate professionals said they were not aware of fractional projects being developed there, the Coeur d’Alene Association of Realtors recently added fractional ownership as a category in its Multiple Listing Service, said Kim Cooper, a spokesman. The MLS has about 10 single-family residences being sold in shares, he said, in communities including Priest Lake and Harrison.
“It’s been customary in vacation areas for some time, but I think it’s just caught up to us,” Cooper said.
At MountainSide, one residence is complete, two are under construction and nine more are planned during the first phase, to be built as demand requires, said Howard Trott, managing director for Schweitzer Mountain Real Estate, the project developer. The residences are being built on the hillside just above and to the side of the Selkirk Lodge.
The fractional ownership plan at Schweitzer offers owners the ability to sell their property, rent their weeks, or trade them for time at other vacation properties around the globe, similar to time shares. The homes are professionally managed and maintained. Unlike time shares, however, owners in fractional developments own deed to a portion of the brick and mortar, as opposed to just time spent there.
At MountainSide, ownership comes with other benefits, including a concierge service to warm up the house, pull out the skis and shop for groceries. The homes are being built for LEED (Leadership in Energy and Environmental Design) certification for the more environmentally conscious buyer, with geothermal heating, bamboo floors and energy-efficient appliances.
Owners also have the ability to just leave when vacation’s over and not have to “close up” the home or deal with security or maintenance. All utilities, insurance, maintenance and housekeeping are handled by a management company and paid for with annual dues of $7,400 per share.
“When you look at the cost of vacation homes as a whole … then you look at the average number of days vacationers actually spend at their vacation homes, it really makes sense,” said Jason Powell, a Lukins and Annis real estate attorney in Spokane who has researched fractional ownership in anticipation of the trend. “If you can get all the time you need at a fraction of the cost, I think it makes sense. And I think people are starting to realize that it makes sense.”
Lisa Gerber, a spokeswoman for Schweitzer Mountain Real Estate, said the ownership concept appeals to the resort as well, because it provides more “heads in beds.” Unlike vacation homes that sit unused for much of the year, these “lit up” homes usually will be occupied, which means more business for shops, restaurants and the resort, she said.
Burns, the consultant, said studies have shown that owners in fractional developments spend more money on vacation than the average traveler because they’ve already paid for lodging.
If the first phase of MountainSide sells out, the 12 homes could have up to 96 owners sharing the time there. Each owner is guaranteed two weeks each during winter and summer. The time is distributed on a rotation, in which the owner with the first pick might rotate to the end of the line the following year. Owners also can call and check for available time during the high seasons or the shoulder seasons.
Financing for buyers at MountainSide is being provided by Panhandle State Bank, with a 25 percent down payment required. Real estate professionals throughout the region said securing financing for new condominium projects in this tight economy has been difficult to impossible.
“Right now you can’t finance a condo project at all,” said Scot Auble, a longtime Spokane appraiser.
Trott, with Schweitzer Mountain Real Estate, said lenders have told him there is less default on loans with fractional projects, possibly because less money is initially invested and because the projects usually are professionally managed.
“It is a different product for this area,” Trott said. “It’s just not something (buyers) have thought of because traditionally, they would have bought a condo or a home. They come in and look at us and say, ‘Really? Well, tell me about that.’ It takes a couple of visits. It takes people time to understand it.”