Posted: Apr 25, 08 7:42am
The National Association of Realtors 2007 Second Home Sales statistics are out. Here are the highlights for vacation homes.
The combined total of vacation and investment-home sales declined with the overall market in 2007, but still accounted for 33 percent of all existing and new home sales, which is close to historic norms.
NAR’s annual Investment and Vacation Home Buyers Survey shows vacation-home sales dropped 30.6 percent to 740,000 in 2007 from a record 1.07 million in 2006. At the same time, primary residence sales declined 10.0 percent to 4.34 million in 2007 from 4.82 million in 2006.
Lawrence Yun, NAR chief economist, said “Vacation-home sales rose to a new record in 2006 because there was a pent-up demand from buyers who couldn’t find a property as a result of tight supplies in preceding years.”
The overall sales decline in 2007 resulted from a combination of factors. “Certainly, second homes are discretionary purchases and there is a natural tendency to pull back from big-ticket items in periods of uncertainty,” Yun said. “The other factor is the disruption in the mortgage market, with a significant tightening of credit during the second half of 2007. Some buyers simply adopted a wait-and-see attitude.”
Yun said lifestyle factors and strong demographics remain positive for the vacation home market. “Investment considerations are secondary for vacation-home buyers, so there is some dormant underlying demand,” he said. “A peak of population is moving through the prime years for buying recreational property."
59 percent of vacation homes purchased in 2007 were detached single-family homes, 29 percent condos. I
28% of vacation-home buyers paid cash for their property.
The typical vacation-home buyer in 2007 was 46 years old, had a median household income of $99,100, and purchased a property that was a median of 287 miles from their primary residence.
In listing the reasons for purchasing a vacation home, 84 percent of buyers wanted to use the home for vacation or as a family retreat; 30 percent to use as a primary residence in the future; 26 percent to diversify investments; 25 percent to rent to others; 16 percent for the tax benefits.
Last year, 19 percent of vacation homes were purchased in the Northeast, 16 percent in the Midwest, 41 percent in the South and 24 percent in the West. In terms of location, 30 percent of vacation homes were purchased in rural areas, 20 percent in resorts, 20 percent in a suburb and 14 percent in an urban area or central city.
Eight in 10 second-home buyers consider it a good time to invest in real estate, compared with 59 percent of primary residence buyers.
What do you guys think? Is it a good time to invest in a second home?
