If your custom building business tends to cater to the second-home and vacation-home buying crowd, there’s good news from the National Association of Realtors (NAR): sales of vacation homes rose 4.7% in 2006. Vacation-home purchases are based on demographic and lifestyle factors, not on financial expectations, according to the NAR, which accounts for this growth even while investment-home sales fell 28.9% in 2006. The NAR’s annual “Investment and Vacation Home Buyers Survey”, released earlier this spring, reports several interesting trends.
The age of vacation-home buyers is skewing younger and returning to historical averages, for one thing; while in 2005 the median age of a vacation-home buyer was a slightly-older-than-average 52, the median age went down to 44 in 2006. “Historically it has been a middle-age, middle-income boomer phenomena,” points out Walter Moloney, NAR’s senior public affairs associate for industry trends, research studies, reports, and statistics.
Also, vacation-home prices dipped by 2% in 2006, down to a median price of $200,000, which may be the result of increased inventory on the market because of speculators dumping their investement properties, giving buyers the leverage to negotiate prices downward in the resale market, according to Moloney.
A good chunk of vacation-home buyers—25%—are paying cash for properties and those purchasing with loans are making downpayments in the neighborhood of 25% as well, according to the survey. Forty-four percent of vacation-home buyers reported buying newly constructed homes.The survey found that 86% of vacation-home buyers purchased only one vacation home, 12% purchased two, and 2% purchased three or more properties. According to the NAR, 55% of vacation-home buyers said they were likely to purchase another property within two years. Two-thirds of owners surveyed wanted to buy a vacation home close to a body of water, 39% were interested in nearby recreational or sporting activities, 38% wanted a vacation home near a resort area, and 31% preferred nearby mountains or other natural attractions.
