The Lodges at Eagles Nest
According to a just released National Association of Realtors (NAR) Investment and Vacation Home Buyers Survey, sales of vacation homes increased 7.9% in 2009 compared to 2008 and market share rose to 10% from 9%. In comparison, investor-oriented sales fell 15.9% in 2009. That said, investor purchases were responsible for nearly two-thirds of all of the second home sales in 2009 and nearly one-half of investment buyers paid cash compared to less than one-third of vacation homebuyers. Correlating pricing with this fact is revealing. While the median investor property sales price fell 2.8% in 2009, the median vacation property price rose 12.7%. This suggests that vacation home pricing may have reached its bottom last year.
NAR reports that 27% of homebuyers in 2009 were “vacation” and/or “investment” homebuyers; 17% or 940,000 were investment purchases while 10% or 533,000 were vacation purchases. While segregating the “second home” segment appears to be splitting hairs, there are some distinct differences* in these two products and their related buyer profiles.
Similar demographic characteristics for the two buyer types include married couples with a median age in the mid-40s and households supported by two income earners. The differences between the two focus largely on the types of properties that are favored. While 30% of vacation homebuyers prefer a rural location, 35% of investment buyers prefer the suburbs. Vacation home buyers will travel more than 300 miles from their primary residence, while investment buyers will travel a comparatively modest stretch of fewer than 25 miles. Both prefer existing (vs. new) single-family properties, but investor buyers have a stronger propensity to purchase condominium apartments.
Note: The term “Second Home” may include similar property types but it contains two distinctly different purchase motivations. “Vacation” homes are second homes that are used exclusively as recreational destinations for the buyer and the buyer’s family and friends while motivations for the purchase of “investment” second homes typically include investment portfolio diversification, potential rental income, and tax benefits. That said, the buyer may, or may not, use the property periodically for personal leisure.
