Real Estate: The JetBlue effect
Cheap air fares are fueling far-flung vacation-home markets.
NEW YORK (CNNMoney.com) - You don't have to be affluent to fly off to your weekend getaway anymore -- with the rise of discount flyers like JetBlue and Southwest Air, second-home buyers have expanded their target areas outward.
In a survey last year, Escapehomes.com found that 60 percent of respondents planning to buy a second home were looking more than 500 miles away from their primary residence.
"Every year we watch as distance becomes less of a factor," says David Hehman, CEO of Escapehomes.com.
"The traditional second home," says Paul Prescott, national director for Deloitte & Touche residential development department, "was two or three hours drive away. People felt it had to be that close to get enough use of it to make it worthwhile."
Most vacation home communities were clustered within a short drive of major cites. It's what made the Catskills the weekend home of choice for New Yorkers, Cape Cod the vacation spot of choice for Bostonians and the Jersey Shore the pick of Philadelphians.
But it's now possible for New Yorkers to fly to Burlington, Vermont quicker than they can drive to the Catskills. And fares as low as $45 make it eminently practical.
Leslie Gauff, a real estate broker with Carlson Real Estate in Stowe, Vermont, says that inexpensive air fares have had an impact on her business.
"The Bostoners drive up for the weekend," says Gauff. "It's about three hours. But many New Yorkers fly." That's in lieu of a five-hour drive. "I've had people say that it's just as easy, in some ways easier, to fly up here than to drive to the Hamptons."
Stowe home prices have increased about 18 percent a year for the past three years, according to Gauff.
Western resorts are even more dependant on air transport.
JetBlue flies from Long Beach to Las Vegas for $44. Southwest flies to cities within Texas for $49 and anywhere within California for $59.
"Salt Lake City is a good example," says Prescott. "Someone in San Francisco can fly to Utah and be on the slopes at Park City faster than they can drive to Tahoe."
According to Hehman, it's not merely the low fares; it's also ease and speed. "People are just more comfortable flying now. And fighting traffic to get to a weekend place really detracts from the experience," he says.
Will U.S. airlines ever emulate Europe?
Although some of the fare deals sound pretty great, American carriers are still way behind the Europeans. In Europe, low air fares are transforming the vacation-home market. It's now possible to fly from one European country to another for less than the cost of riding the bus to the airport.
The UK's Abbey National Bank estimates that some 1.2 million Brits now own second homes in France and on the Iberian Peninsula. Germans own some 300,000 homes in Spain. The French are even buying homes in Britain, to the tune of about 20,000.
A sample of prices posted on the Web site of RyanAir, the leader in discount European fares helps explain why:
RyanAir has maintained its profitability by relentlessly slashing costs and by unbundling services (such as meals and baggage checks) and charging for them. It is also starting to host gambling games onboard. The company claims that more than half its seats or more will be free within a few years.
RyanAir is not the only bargain carrier flying European skies; easyJet, for example, flies passengers from England all the way to Ibiza, off Spain's Costa Blanca, for £30.99, about $54. Other carriers helping to make air fares practically irrelevant, even for budget travelers, include Air Berlin, Wizz Air and SkyEurope.
There's nothing comparable in the United States – at least, not yet. A JetBlue spokesman, Bryan Baldwin, does not think that his company will start to mirror the kind of prices (or lack thereof) that RyanAir is putting up in Europe.
If the trend to really low airfares becomes even more widespread, it could have a heavy impact on second-home markets.
As Prescott points out, the expectations of the boomer generation is much different than those of their parents. "The whole nature of second home ownership is changing," he says. "My pre-conceived notion of a second home is a cabin on a lake. Today the second home experience often includes a planned community or activity -- golfing or skiing for example -- that may not be available near the primary residence."
And there's one more way that low air fares affect home sales; they attract tourists. Jess Reid, president of Jess Reid Real Estate in Park City, says, "Tourists visiting Park City are the target market for home sales. They come for a visit, love the place and buy a home. If air fares are low, we see more tourists and make more sales."