If you’re thinking of buying a second home in the next five years, this might be your best opportunity.

After being battered during the housing bust, the vacation-home market is showing signs of life. Reports of bidding wars are trickling out of some of the locales that bore the brunt of the housing bust, and brokers in other markets, while not sounding the “all clear,” at least say conditions aren’t getting much worse.

Near-record-low mortgage rates, bargain prices and dwindling home inventories are bringing some once-untouchable markets within reach for the first time in a decade, say housing-market experts.

Those factors are “creating a sense of urgency,” says Pam O’Connor, president of Leading Real Estate Companies of the World, a broker network. “People feel like they might miss this window.”

Salt Lake City resident Donna Peeters says that is one of the reasons she wants to step up her search for a second home in Santa Barbara, Calif. She and her husband started thinking about buying a vacation home a couple of years ago, she says, and have seen prices fall as they waited. They are looking for a place close to the beach, and expect to spend about $2 million cash.

“It definitely feels like a good time to jump in,” she says.

Signs of a Bottom

Sales of vacation properties fell 56% between 2006 and 2010, but climbed 7% in 2011 to 502,000, according to the most recent survey by the National Association of Realtors, a trade association. Yet prices remain soft; according to the NAR, the median price on vacation homes dropped more than 19% in 2011 to $121,300.

Realtors say some buyers—those who plan to keep a home in the family for generations—are snapping up homes now, even though prices might have further to drop, to take advantage of low mortgage rates. The average rate on a 30-year fixed-rate loan stood at 3.97% for the week ending May 1, according toKeith Gumbinger, vice president at mortgage tracker HSH.com. Buyers with strong credit who can put down more than 25% should be able to find rates near 4%, he says.

The bottom for vacation-home prices will be clear only in retrospect, but there are signs one might be forming, says Mark Zandi, chief economist at Moody’s Analytics. Some markets in California already are seeing price increases, while hard-hit markets like Phoenix and Scottsdale, Ariz., have seen slowing declines, he says.

“From a long-term investment horizon, vacation homes will do very well,” Mr. Zandi says, citing low interest rates and expected price appreciation in many markets.

The shorter-term outlook for vacation homes is murkier. Moody’s Analytics forecasts overall U.S. home prices will drop next year—by a scant 0.8%—but the nationwide figures mask sharp geographical divides in popular second-home markets.

Miami, for example, which already has seen prices of all homes drop 54% since 2007, according to Moody’s, is expected to lose about 0.1% annually over the next five years. Meanwhile, Napa, Calif., whose prices have also been slashed in half, could see prices rise nearly 10% a year.

Realtors say they are even seeing such dichotomies within markets, with sales in more-desirable locations starting to perk up. In New York’s Hamptons, for example, homes positioned north of the Montauk Highway are languishing on the market for months, while well-maintained homes south of the highway, which are closer to the ocean, are sometimes getting multiple offers within days, says Nicholas J. Planamento, president of the Hamptons and North Fork Realtors Association.

Factors to Consider

There are a number of factors to consider when deciding whether or not to buy a vacation home. The first: momentum.

If you considered an investment in the stock market, looking at how prices moved over the past year would be a poor way to estimate future performance. On the other hand, research by Yale University Professor Robert Shiller, widely credited with predicting both the stock market crash of 2000 and the housing bust, has shown that momentum in home prices has staying power.

Then again, prices have been dropping in many markets for five years already, and most experts believe the steepest drops already have taken place. And some stronger vacation-home markets, such as Burlington, Vt. (up 1.3% in the past year), have momentum on their side.

A second point to consider: financing. Even though rates are low, lenders’ standards for making loans are tight. And real-estate agents say deals are falling apart even after buyers obtain initial mortgage commitments.

That means buyers who can offer all cash have a leg up over those who make offers contingent on financing. Buyers who don’t want to tie up that cash forever might consider purchasing the house with cash and then taking out a mortgage later.

All-cash sales dominate in some of the most beaten-down markets. One member of the broker network Leading Real Estate Companies of the World in Sarasota, Fla.—where overall home prices have dropped 43% in the past five years, to a median $174,900—reported that 70% of her home sales were cash-only, says Ms. O’Connor.

Here are some vacation-home spots that look primed for a breakout, according to five-year price forecasts by Moody’s Analytics, along with some that are still bouncing along the bottom.

Heating Up

Brunswick/St. Simons Island, Ga.

Drop from peak: 24%

Forecast: +6.4% per year

The marshy coast of southeastern Georgia features the Golden Isles—which are replete with a luxurious resort and multimillion-dollar mansions. The wealthy Southerners and foreign buyers who typically drive the market disappeared by June 2007, says Mary Bryan Fields, who manages the sales staff of Hodnett Cooper Real Estate in St. Simons Island, Ga.

But lately, those buyers have been coming back, she says.

“In 2005, people were telling us that they wished they had bought here in ’98 or 2000,” she says. “We’re basically back to 2000 prices right now. So now’s their chance,” she says.

Napa, Calif.

Drop from peak: 52%

Forecast: +9.7% per year

In California wine country, homes in the $1.2 million-and-up market are moving briskly, says Elliott Faxstein, Napa-based director of the North Bay Association of Realtors. Such buyers started to return in the fourth quarter of last year as the stock market improved, he says. The area is also finding buyers in new millionaires from Silicon Valley, a two-hour drive away, says Mr. Faxstein.

One caveat: Difficulties with appraisals are making it hard to get mortgages, meaning high-end buyers often have to step up with cash, he says.

Santa Barbara, Calif.

Drop from peak: 51%

Forecast: +7.4% per year

Southern California was one of the hardest-hit markets and one of the earliest to fall. According to Moody’s, prices peaked in Santa Barbara back in the third quarter of 2005, six months before the average peak nationwide. But since the stock market picked up last year, sales of high-end vacation homes have been brisk, says Jon Perkins, a Realtor at local agency Village Properties.

Mr. Perkins says a quarter of the inventory of $10-million-plus homes that were on the market in December has been sold or put into escrow in the first quarter of 2012. Though most vacation-home segments have picked up, he says deals still can be found in homes that haven’t been remodeled or ones that started remodels that were stalled by the housing bust.

Slowly Strengthening

Cape Cod, Mass.

Drop from peak: 22%

Forecast: +3.6% per year

Though the Cape continued to see prices fall last year, the swankiest towns—such as Chatham and Wellfleet—are making a comeback. Homes in Chatham (median price: $639,000) sold for 8.3% more in 2011 than they did in 2010, while homes in Wellfleet ($540,250 median) sold for nearly 14% more, according to Boston-based Warren Group, a real estate data tracker.

Realtor Dan Sheehy of Kinlin Grover Real Estate in Wellfleet says some buyers have come to town expecting a soft market.

“It’s an education process of showing that the market is picking up,” he says, noting that the pace of sales also isn’t as rapid as it was during the boom.

Asheville, N.C.

Drop from peak: 11%

Forecast: +2.0% per year

Set in the Blue Ridge Mountains of North Carolina, Asheville’s real-estate market hasn’t had nearly as tumultuous a time as other markets in the South, such as Florida. Still, certain pockets of western North Carolina did see overbuilding by eager developers, says Realtor Brian Etheridge of Carolina Mountain Sales in Asheville.

Mountain homes in older communities that were built before the 2000s have seen relatively modest price decreases, but homes and land being sold in neighborhoods started in the early and mid-2000s have seen prices go down by as much as 50%, he says. The reason: Buyers legitimately fear that long-promised amenities, like golf courses and club houses, will take years to come to fruition, Mr. Etheridge says.

Provo/Sundance, Utah

Drop from peak: 24%

Forecast: +2.5% per year

Just a 20-minute drive from Provo sits the posh ski resort of Sundance, also a home to the eponymous film festival. The market—relatively small with only a few hundred condominiums and homes—suffered greatly beginning in 2008, says Roy Laycock, a real-estate agent at Coldwell Banker in Sundance, with prices on some units dropping by more than 50%.

In general, larger condominiums have held up better than single-family homes, he says, but both segments have been hit by foreclosures and short sales.

Forecast Is Flat

The Hamptons and North Fork, N.Y.

Drop from peak: 29%

Forecast: +0.83% per year (Suffolk County)

Though prices aren’t dropping as rapidly as they had been, the Hamptons could fall victim to a second wave of foreclosures once lenders, stalled by shoddy paperwork, get their act together, says George Simpson, owner of Suffolk Research Service, a market-research company.

“We keep thinking that it will pick up, but we’ve been sitting in the same place for four years,” says Mr. Simpson.

Mr. Planamento, the local Realtor association president, says the best deals can be had among properties that need renovation work, which many upscale buyers shy away from. And as has always been the case, homes south of the Montauk Highway, which are closer to the Atlantic, have held value better, he says.

Naples, Fla.

Drop from peak: 55%

Forecast: +1.3% per year

Though sub-$500,000 homes have seen prices flatten or slightly rise over the last 12 months, $1-million-plus homes are still seeing price declines, according to the Naples Area Board of Realtors. Homes that sold for between $1 million and $2 million fell in price by about 6% between the first quarters of 2011 and 2012, while homes priced above $2 million lost 10%.

Realtor Brenda Fioretti of Prudential Florida Realty says that about 70% of home sales in Naples are cash-only deals and that buyers are flocking to high-rise condominium buildings on the Gulf of Mexico.

Phoenix/Scottsdale, Ariz.

Drop from peak: 56%

Forecast: +1.7% per year

This desert enclave was one of the first to be hit by the real-estate downturn, but has also been one of the first to recover, says Gordon Snyder, president of the local Realtor association.

The problem for vacation-home owners: The rebound has occurred mostly in lower-priced homes, while there’s a big inventory of higher-priced homes, Mr. Snyder says.

A version of this article appeared May 5, 2012, on page B7 in some U.S. editions of The Wall Street Journal, with the headline: Vacation Homes Beckon.