The National Association of Realtors (NAR) revealed that the sales of second homes for investment went down by 28.9 percent in 2006. The figure was down from 2.32 million vacation homes sold in 2005 during the peak of the so-called "five-year housing boom" to 1.65 million. NAR, however, made it clear that the drop was not due to the general housing slump last year because vacation homes soared by 4.7 percent to a record 1.07 million units compared to 1.02 million sales in 2005.
NAR further said that based on its survey, 22 percent of all homes bought in 2006 were meant for investment and the figure was down from a 28 percent market share in 2005. The number of vacation homes purchased, though, went up from 12 percent in 2005 to 14 percent of the total market for new and existing homes.
Vacation home buyers
The typical buyers of vacation homes in 2006 were those aged 44 and had a median household income of $102,000. The vacation homes preferred were at a mid-point of 215 miles from the homeowners' primary residence. NAR said the demographics were favorable for sales of vacation homes with most consumers in their prime buying ages. Buyers purchased second homes as recreational properties for personal use with investment as a secondary reason. Real estate experts say it does not necessarily follow that those who buy multiple vacation properties are the wealthy people. This small but growing segment of the market are usually those nearing their retirement, making a good living and have more control over their work schedule that they have extra time to spend at their vacation homes. Apart from recreation, some of them earn short-term income by renting out their second or third homes.
As for the price, the median rate of a vacation home in 2006 was down two percent from $204,100 in 2005 to $200,000 in 2006. The typical investment home also sold lower at $150,000 compared to the $183,500 in 2005.
NAR studies
The second home segment of the housing market is actually bigger than expected making up one-third of the market, according to the NAR. Two NAR studies have confirmed that indeed this market is growing based on the number of purchases made in 2003 and 2004. In 2004 alone, 36 percent or a total of 2.82 million of homes bought were second homes while in 2003, the total was only 2.42 million. Investment was the main purpose of the purchases (23 percent) while only 13 percent were for vacation reasons.
NAR's studies on second homes were based on two surveys done between middle of 2003 and middle of 2004. Census Bureau statistics in 2003 showed there were 43.8 million second homes in the U.S., 6.6 million vacation homes and 37.2 million investment properties.
About the Author
Richard Soto is the author of this article. Check Irving Realtor for more on Irving Real Estate and Irving Homes For Sale
