Just as high housing prices in California helped create spill-over boom markets throughout the West, the reverse is now coming true as some markets in the West begin to feel the receding wave of Californians.

That, in part, is because California's second home buyers are either running out of cash or they are hedging their bets against falling prices or both.

Second home sales in the Golden State in 2006 plunged to their lowest levels since La Jolla, CA-based DataQuick began tracking the sector in 1998.

DataQuick blames lower appreciation on primary residences -- as well as continued interest in out-of-state properties -- as reasons for the 37.1 percent drop in second homes sales of homes in California's vacation home markets.

Second homes, as a more discretionary buy, is likely to feel market down turns quickly, but prices are pretty hefty too and still on the rise in select markets making the buy difficult in any market. In many cases boom-market level equity growth from one of the more expensive housing markets, in or out of California, is often necessary to have sufficient leverage to buy a vacation home in the Golden State.

The median price paid for a second home in California was $400,000 last year, up 10.8 percent from $361,000 the year before. Median prices ranged from under $150,000 in some remote desert communities to well above $1 million in Pebble Beach and Carmel.

DataQuick said only 13,798 second homes were purchased in vacation markets in California in 2006, down from 21,925 the year before. The 2006 number is the lowest number of sales in DataQuick's second-home statistics. The second home sales market peaked in 2004 when 24,916 vacation homes sold.

Sales of all homes in California have been on the decline for more than a year and were down 24.9 percent in 2006 --- 742,715 in 2005; 557,782 in 2006.

"Many California homeowners were feeling pretty good in 2004 and 2005 when there was double-digit appreciation. It appears a lot of them felt that using built-up equity to buy a mountain cabin or a condo in the desert would be a good investment. As prices leveled off last year, interest in weekend retreats declined," said Marshall Prentice, DataQuick's president.

California's major second home markets all saw massive sales declines -- down 38.4 percent in the Palm Springs area; down 34.7 percent in Sierra Mountains and foothill communities; down 37.3 percent in the Lake Arrowhead/Big Bear area.

Out-of-state buying by Californians dwindled last year too. For, example, in 2006, Californians bought 8,409 Las Vegas area homes, down 32.4 percent from 12,440 in 2005. In 2001 there were 1,824 Las Vegas area purchases by Californians.

Because most second-home communities are also primary-home communities, the second home market dragged down sales overall in these areas, but at a more moderate pace, said DataQuick. However, the trend is impacting prices in cities Californians favor as second home enclaves.

The National Association of Realtors reveals fourth quarter 2006 home prices, compared with fourth quarter 2005 prices were down by more than 2 percent in the Phoenix and Tucson, AZ areas; down nearly 9 percent in Reno, NV and about 1 percent in Las Vegas.

Published: March 2, 2007

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.