From SmartMoney.com:

CREDIT-CRUNCH-SQUEEZED homeowners and investors are unloading their second homes en masse, offering up desirable vacation properties at some pretty steep discounts.

"When the market is down and there's blood in the streets, someone else's misfortune could work in your favor," says Ken Kamen, president of New Jersey-based Mercadien Asset Management. Buying now entails some risk, however. After all, prices could drop even further. But for those looking to hold a property long term for a family vacation spot or eventual retirement retreat should feel confident that they'll recoup the investment, he says.

Here are five places where vacation-home bargains abound:
1) Panama City Beach, Florida

There's something for everyone in this Panhandle town where white "sugar sand" beaches along the Gulf of Mexico give way to inland attractions, including six championship golf courses and an active restaurant and nightlife scene. Prices for beachfront property run the gamut from $100,000 for a one-bedroom condo, to $2 million-plus for single-family homes of five bedrooms or more, according to vacation rental site HomeAway.com.

Why Buy Now: Besides the weather (temperatures rarely dip below the 60s, even in January) a new international airport is slated to open in the next couple of years. With it comes low-cost carriers and an abundance of nonstop flights. (Currently, flying from New York involves at least one connection and travel time of anywhere from 4.5 to 13 hours. In comparison, a nonstop flight from New York to Orlando takes about two hours.) That ease of access should help boost tourism — and property values, says Anil Pereira, CEO of SecondSpace.com, a property-finding service. "It'll be more feasible to own a second home there," he says. "People will be able to fly in for the weekend."

Click here to read the full article:
SmartMoney.com names Panama City Beach, FL the #1 Bargain Place to Buy a New Home

I agree 100%. The condo glut/bust combined with foreclosures have made the area a great bargain.

PLUS, in many places a "vacation home" that is within reach of most people ($250,000 or less) is nowhere near the action. I just took a random look at Zillow and found a house (what many would call a "beach cabin") just a couple of blocks from the beach:

13900 Bay Ave, Panama City Beach, FL 32413 | Zillow Real Estate

In a few years, people will look at his as the "good old days when you could snap up Bay County property for next to nothing."

Nice find Ted... Bid A Wee beach is a great little neighborhood.

just goes to show that the market will always correct itself. california has reported new home sales up 68% from last years figures. aparently there were lots of first time buyers out there waiting for prices to come down to a reasonable level.... imagine that!