Big Jump in Vacation Home and Investment Property Sales

Authored By: Jeanette Joy Fisher

People are buying more getaway properties than ever before, according to a recent study by the National Association of Realtors (NAR). In 2005, in fact, four out of every ten home sales were bought either as vacation homes or investment properties. That represents a 16 percent jump from 2004, and amounted to 3.34 million homes.

The study showed a distinct difference between vacation home buyers and those who buy investment properties. People buying vacation homes are generally looking either for lifestyle opportunities or places for their retirement. These properties can sometimes be a considerable distance away from their current residences. However, investment property buyers are usually looking for properties relatively close to where they live. That's because their motivation for buying property is completely different.

Interestingly, the study found that the Midwest is the strongest area for both second homes and investment properties. Many people are looking for a nice modest-priced home in a smaller town where they can retire eventually, and such homes are still plentiful in the Midwest, according to the study.

The NAR study seems to indicate that the Baby Boomer generation (who were born from 1946-64) are the main driving force behind the boom in second homes and investment properties, and as buyers, they're often willing to pay a premium price to get what they want. The median price of an American vacation home in 2005 was $204,100, which represented a 7.4 percent increase from the previous year. The median price of an investment property rose 24 percent in 2005, to $183,500.

Across the country, more than one in ten Americans (11 percent) now own two properties, and another 4 percent own three or more, and those numbers are increasing at an unprecedented rate. The NAR study found that the median age of vacation home buyers in 2005 was 52, and nearly 20 percent of those buyers said that they were planning to use their second home as their primary residence someday. In other words, they're looking for places they can call home once they retire.

This isn't just a one-time finding. Since the first wave of Baby Boomers are just turning 60, it appears that the trend toward buying second homes and investment properties is likely to continue for a good many years to come--perhaps for the next quarter century.

Copyright © 2006 Jeanette J. Fisher

Jeanette Fisher teaches beginning real estate investors five easy ways to find, finance, fix and sell houses. The difference: interior design secrets for fixing and Home Staging Information. Learn how to get started with FREE ebook at www.doghousetodollhousefordollars.com

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