Second Home Sales Poised to Recover
Posted: Mar 10, 2010
Sales of vacation homes dropped nearly 31 percent last year, while investment-home sales fell just over 17 percent according to the 2009 National Association of Realtors Investment and Vacation Home Buyers Survey. While the market was down in all segments, these two categories fell by a greater amount than the sales of primary residences, which fell by just over 13 percent.
Second home sales accounted for 30 percent of all home sales in 2008. This reflected a drop of 33 percent from 2007 and 40 percent from 2005 – the peak year for second home purchases.
Even with the decline in second home sales, demand is expected to remain relatively strong due to the fact that a large segment of the population is in the prime age range for buying vacation or investment property.
By the time a person reaches their 40’s, interest in owning a second home increases dramatically. Currently there are 44.8 million people in the USA between the ages of 40 and 49 and another 40.7 million between 30 and 39.
Second home buyers tend to be more confident in today’s market. With prices down, interest rates down and consumer confidence on the rise, sales of second homes are expected to rise in the months ahead. A survey indicated that 80 percent feel now is a good time to buy a second home, compared to 71 percent of primary home buyers.
Sales facts on vacation homes and investment property purchases:
- 9 percent of home buyers in 2008 purchased a vacation home
- 21 percent of home buyers in 2008 purchased an investment property
- Median price of a vacation home in 2008 was $150,000, down 23.1 percent from 2007
- Median price of an investment property in 2008 was $108,000, down 28 percent from 2007
- Median distance from primary residence for a vacation home purchase was 316 miles; for an investment property purchase it was 19 miles
- Vacation home buyer profile: 46 years old, married, household income of $97,200
- Investment property buyer profile: 47 years old, married, household income of $85,000
- Top Reasons for buying a vacation home:
- For vacation or family retreat (89%)
- To diversify investments (27%)
- To provide rental income (27%)
- As primary residence in the future (26%)
- For use by a family member, friend, or relative (17%)
- Top reasons for buying an investment property
- To provide rental income (58%)
- To diversify investments (38%)
- For use by a family member, friend, or relative (19%)
- For vacation or family retreat (15%)
- For tax benefits (13%)
Jeff Scislow has led the industry for years in a variety of categories having sold over 2500 homes. For help with purchasing a Vacation Home or an Investment Property, contact Jeff Scislow, CDPE, CRS at RE/MAX Results (952) 431-3900.
