Vacation Home Sales Sizzle, Rentals Booking Fast

In the kitschy community of St. Michaels, on the Maryland shore, businesses are gearing up for the official start of the season, Memorial Day weekend. Trucks carrying dozens of bicycles are unloading into waterside racks and shopkeepers are moving their bright-colored wares out onto the sidewalks. For real estate rental agents, however, the hard work is largely done. The biggest houses are already booked.

"Those houses do tend to book up in January," said Deborah Lipscomb, owner of Eastern Shore Vacation Rentals. "Because of the Jersey Shore and the things going on there, we are seeing more of a demand for this area."

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The recession hit home buying in this area, which actually increased competition in the rental market, but that may be about to change. Low mortgage rates, returning consumer and investor confidence, and the new migration from New Jersey are all combining to turn this Maryland market around.

"We're getting the calls again from people looking to really buy, buy into the market and start renting again," said Lipscomb.

The impact of Super Storm Sandy is less apparent further south on Hilton Head Island in South Carolina.

"It's a great time to buy, it's a bad time to sell is what I tell people," said James Wedgeworth, who has been selling real estate on the island for over a decade. "There is a light at the end of the tunnel."The rental market on Hilton Head, which largely caters to the golfing set, has remained strong throughout the recession, likely because so few people wanted to buy. Confidence is slowly returning here, but prices are not.

"It hasn't really started going up, but at least it's not going down. We had seven straight years of prices going down. That's no fun," added Wedgeworth.

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Vacation home sales rose 10 percent nationally in 2012, according to the National Association of Realtors, but as with all things real estate, location is key. Prices are just stabilizing in South Carolina, but in the tiny towns of eastern Long Island, New York, better known as the Hamptons, home prices are roaring back and rentals are fully booked for the season.

"We've seen bidding wars in the four to five million dollar range as well as in the overall market," said Laura Nigro, a real estate broker in Bridgehampton. "It's so much better than when the 2008, 2009 economy shrank and people were very much afraid to invest in anything.