Meanwhile, speculative interest from buyers seeking to flip
houses for a quick profit has fallen, enhancing the long-term prospects for the
high-end sector. Toll discourages the investor-buyer through contracts that
require buyers to declare they are not speculators and promise that any profits
from a short-term sale will revert to Toll. "We’ve seen this movie before," Toll
says. "As an industry—and as a company—we were hurt in the recessions of 1988,
’89, ’90, and by the speculation that took place in 1986 and the early part of
1987."But in some markets, speculator-owned properties continue to
dominate. Investors accounted for as much as 64 percent of Myrtle Beach, 47
percent of Panama City, Fla., 46 percent of Naples and 40 percent of Vero Beach,
Fla., real estate in 2005, according to Wellesley, Mass.–based Local Market
Monitor, a real estate research firm. Toll watched many speculators leave the
market in 2006. At Spanish Peaks, Forsch also tries to dissuade speculators, and
added a new stipulation to his contracts: The company reserves the right to buy
a property back at the original sale price if an owner puts it on the market
within 18 months of purchase. All buyers must also apply for club membership for
each property they own. Full membership, which includes golf, costs a one-time
fee of $85,000. Resident membership is $45,000. "In 2004 and 2005, real estate was the darling of investments.
It eclipsed the stock market, and people were moving into real estate," Forsch
says. "There were a lot of projects people were buying as investments, and we
were never crazy about that. What we’re really trying to do is create a
lifestyle." But some buyers who made second-home purchases during the boom,
based primarily on lifestyle options, have seen values appreciate in select
areas. In December 2005, Domenick and Joann Galluzzo acquired a five-bedroom
home in the Porches in Steamboat Springs for just under $1.6 million. Domenick,
a retired attorney and former deputy chief state’s attorney for Connecticut,
estimates the property value has risen approximately 50 percent. And while the
Galluzzos, whose primary residence is in Fairfield, Conn., watched other real
estate markets decline, they were not concerned about buying in Steamboat. "We were very fortunate," Dome-nick says. "It’s been booming
here in Steamboat." The Galluzzos began vacationing in Steamboat in 1974, and since
buying at the Porches, they have upped their time in Steamboat to more than six
months out of the year; they ski selectively—in good weather and with few
tourists. Their three children and eight grandchildren plan vacations there. "We see our family more in Colorado than we do back East," he
says, adding that in the summer, his grandchildren have learned to ride their
bicycles and enjoy swimming in the river. "It’s nice to have them," Galluzzo
says. "And Steamboat is a gorgeous place. We came off of Rabbit Ears Pass in
1974, we looked down in the valley and we were just in awe of it." Elizabeth Harris is a staff writer for Worth.
Illustration by C.J. Burton.
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