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 (up from $190,000 in 2004). The median price of an
investment property rose 24 percent in 2005 to $183,500 (up from
$148,000).
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, in fact, according to
the NAR survey's findings.
Copyright © 2006 Jeanette J. Fisher
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