Second-Home Sales Fell Last Year

The combination of vacation- and investment-home sales slipped to 30% of all existing- and new-home transactions in 2008, according to the National Association of Realtors.

However, more than four out of 10 investment buyers and more than three in 10 vacation-home buyers paid cash for their properties, with large percentages indicating that portfolio diversification was a factor in their purchase decision.

The market share of homes purchased for investment was 21% last year, unchanged from 2007, while another 9% were vacation homes, compared with a 12% market share in 2007. The total share of second homes declined from 33% of all transactions in 2007 to 30% in 2008. In 2005, the peak year for home speculation, 40% of sales were second homes.

"We expected vacation-home sales to fall, given the impact of a declining economy on discretionary purchases," says Lawrence Yun, NAR's chief economist. "A steady share of investment-home sales results from buyers' taking advantage of deeply discounted prices in many areas, with a smaller portion of new homes in the sales mix."

Despite weakening second home purchases in 2008, NAR says the long-term demand looks favorable, because there are large numbers of people in the prime years for buying a second home. Currently, 39.2 million people in the U.S. are between the ages of 50 and 59 – a group that dominated sales in the first part of this decade.

SOURCE: National Association of Realtors


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