Sales of vacation homes dropped 30.6 percent in 2007, down to 740,000 from the record-setting 1.07 million that were sold in 2006, according to the National Association of Realtor’s (NAR) 2008 Investment and Vacation Home Buyers Survey, released in March.
The median price of a vacation home dropped to $195,000 in 2007, a 2.5 percent decline from 2006’s $200,000 median price. Investment home sales are returning to their pre-boom levels, showing an 18.1 percent decline in 2007 down to 1.35 million sales from 1.65 million in 2006.
In the report NAR’s chief economist, Lawrence Yun, identified pent-up demand for vacation homes as the reason for 2006’s sales record, which was a 4.7 percent increase over the previous year. With the economic uncertainty that grew during 2007, buyers backed away from making many big-ticket purchases, including vacation homes.
However, despite the decline in sales to more normal levels, the outlook is fairly positive because lifestyle factors and demographics remain conducive to a healthy vacation home segment. Currently there are 38.7 million people in the U.S. between the ages of 50 and 59, 45.3 million between ages 40 and 49, and 40.9 million between ages 30 and 39, making up a broad demographic that is moving through the peak years during which people have become interested in making a vacation or recreational purchase, according to Walter Moloney, NAR’s senior public affairs associate for industry trends, research studies, reports, and statistics.
The survey shows that 2007’s typical vacation-home buyer was 46 years old and had a median household income of $99,100. Also, 84 percent of vacation-home buyers intended to use the home as a family retreat or for vacations, while 30 percent planned to use their vacation home as a primary residence in the future.
In 2007, 65 percent of vacation home buyers and 71 percent of investment home buyers purchased existing homes; the remaining 35 percent purchased new homes. Of vacation homes purchased last year, 59 percent were single-family residences, 29 percent were condos, seven percent were townhouses, and five percent were classified as “other.”
NAR offers the complete 2008 Investment and Vacation Home Buyers Survey for purchase at www.realtor.org.
