U.S. downturn puts vacation back in vacation home

By Ilaina Jonas

NEW YORK (Reuters) - When the going gets tough, the tough, battered and frustrated in U.S. real estate should go shopping for a vacation home -- but not as an investment, industry experts said.

"The important point is we have to get back to the fundamentals and the fundamentals aren't about speculating and real estate," Tom Shapiro, president of real estate investment firm GoldenTree Insite Partners, at the Reuters Global Real Estate Summit earlier this week.

With U.S. housing market in shambles and the U.S. commercial real estate market at nearly frozen, those in the market may have some time on their hands. If they have cash, they may have a wide array of choices of places to spent it, those who attended the summit said.

"I like the idea that in the tough time we can think a relaxing thought about a vacation home," Jacques Gordon, global strategist at LaSalle Investment Management, the investment arm of Jones Lang LaSalle Inc (JLL.N), said.

"As far as where, I would say don't do it outside of the U.S. because at about 12 to 18 months from now the phone will ring and if you're an investor, if you're a transactor, you're going to need to leave that vacation home and get back to your office and start trading again," Gordon said.

Richard Parkus, head of Deutsche Bank (DBKGn.DE) Commercial Mortgage-Backed Securities and Asset-Backed Securities Synthetics Research, said a bargain price is a factor but desirability is foremost.

"I would have to look around and see what area has been most badly hit that I would want to live in -- the Hamptons, Montauk, when they get hit and Phoenix, which is already devastated," he said.

Home builder executives Steve Hilton, chairman and chief executive of Meritage Homes Corp (MTH.N), and Richard Dugas, CEO of Pulte Homes Inc (PHM.N), each have a vacation home.

"I have a vacation home in Park City, Utah," Hilton said. "There are just some fantastic buys up there. I wish I didn't have a home; I could buy one right now."

Dugas bought his Florida home at the peak.

Darcy Stacom, vice chairman of CB Richard Ellis Group Inc (CBG.N), has brokered some of the most high-profile Manhattan property sales, such as last year's $2.8 billion sale of the GM Building. She's been hunting for a second home in where else? Manhattan.

"I own a home in Connecticut," she said. "We've never really had time to stop and do this. We've always rented an apartment right in the heart of Midtown. Prices are off. We're definitely seeing it."

With many housing and credit markets around the globe in crisis, buyers aren't limited to U.S. markets.

"My wife was just talking to me about Provence," said Allen Smith, chief executive of Prudential Real Estate Investors, part of Prudential Financial (PRU.N). He, on the other hand, would opt for Martha's Vineyard, Massachusetts.

Yet others are just not interested in owning more.