The combination of vacation and investment home sales slipped to 30% of all home sales in 2008. According to the 2008 Investment and Vacation Home Buyers Survey by the National Association of Realtors (NAR), the total share of second homes declined from 33% of all transactions in 2007. In 2005, the peak year for home speculation, 40% of sales were second homes.
However, more than four out of 10 investment buyers and more than three in 10 vacation-home buyers paid cash for their properties, with large percentages indicating that portfolio diversification was a factor in their purchase decision.
NAR chief economist Lawrence Yun said, in a press release, that the findings are understandable given the economic backdrop.“We expected vacation-home sales to fall given the impact of a declining economy on discretionary purchases,” he said. “A steady share of investment-home sales results from buyers taking advantage of deeply discounted prices in many areas, with a smaller portion of new homes in the sales mix.”
Despite weakening second-home purchases in 2008, the long-term demand looks favorable because there are large numbers of people in the prime years for buying a second home. The typical vacation-home buyer in 2008 was 46 years old and had a median household income of $97,200. Investment-home buyers in 2008 had a median age of 47 and earned $85,000. “While economic factors can affect sales from one year to the next, the fundamental demand from these large population groups will remain,” Yun said. “Given that most people become interested in buying a second home in their 40s, the bulge of population approaching middle age should drive the second-home market over the next decade.” Currently, 39.2 million people in the U.S. are ages 50 to 59 -- a group that dominated sales during the first part of this decade. An additional 44.8 million people are aged between 40 and 49, and another 40.7 million are 30 to 39.
Here are a few pricing statistics from the report:
$150,000: Median price of a vacation home in 2008
$195,000: Median price of a vacation home in 2007
$108,000: Median price of an investment property in 2008
$150,000: Median price of an investment property in 2007
The location of the vacation homes sold in 2008:
The style of the vacation homes sold in 2008:
NAR’s 2008 Investment and Vacation Home Buyers Survey, conducted in March 2009, includes answers from 1,924 usable responses. The report is free for NAR members, but the cost is $125 for nonmembers. Visit www.realtor.org/newresearch.