According to a recent survey from the National Association of REALTORS® (NAR), the market share of vacation- and investment-home sales held steady in 2010. Although sales volume declined with the overall market, vacation-home sales accounted for 10% of transactions last year while the portion of investment sales was 17%, both unchanged from 2009.
As a Member of the Top 5 in Real Estate Network®, I am committed to keeping my community informed on market statistics that will affect their real estate investment decisions. NAR’s “2011 Investment and Vacation Home Buyers Survey” — covering existing- and new-home transactions in 2010 — revealed that foreclosure or trustee sales accounted for 17% of investment purchases and 11% of vacation-home sales in 2010, compared with 5% of primary purchases. In other words, second-home buyers purchased more distressed homes at discount than did buyers of primary residences.
Also worth noting, all-cash purchases have become prevalent in the second-home market in recent years; 59% of investment buyers paid cash in 2010, as did 36% of vacation-home buyers.
These statistics clearly indicate that there are buyers out there taking advantage of today’s market opportunities to buy second homes, either as once-in-a-lifetime investment opportunities or to make a long-desired lifestyle change. According to the survey, the median vacation-home price was $150,000 in 2010, down 11.2% from $169,000 in 2009, while the median investment-home price was $94,000, which is 10.5% below the $105,000 median in 2009.
As NAR Chief Economist Lawrence Yun explains, “The fall in home prices has opened opportunities for more families to enter the second-home market. Even if purchases are delayed due to economic circumstances, the underlying long-term demand — the desire for purchasing second homes — remains because people in their 30s and 40s will reach the prime age for buying and will drive the second-home market in coming decades as conditions permit.”
The NAR survey reveals that lifestyle factors continue to be the primary motivation for vacation-home buyers while the desire for rental income drives investment purchases. Vacation homes were more likely to be located in a rural area while investment homes were more likely to be in a suburban location.
Whether looking to buy or sell a vacation home or investment property, today’s market may be the optimal time to do so. If you’d like a closer look at second-home opportunities in our area, please contact me. Be sure to forward these informative statistics to others who may be interested as well.