Vacation
Homes and Investment Property Sales Up
Real
estate investing trends shift as Baby
Boomers actively invest in vacation homes
and investment properties.
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, college instructor, teaches
interior design psychology and real estate
investing.
For more about investing, see
Real
Estate Investing Information.
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