Vacation-Home Sales Hold Even in 2010

<p class="MsoPlainText">Washington, D.C. – The market share of vacation- and investment-home sales held steady in 2010, although the sales volume declined with the overall market, according to the <a href="http://www.realtor.org" target="_blank">National Association of Realtors</a>.</p> <p class="MsoPlainText">NAR’s 2011 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2010, shows vacation-home sales accounted for 10 percent of transactions last year while the portion of investment sales was 17 percent, both unchanged from 2009.</p> <p class="MsoPlainText">NAR Chief Economist Lawrence Yun said, “Despite extraordinarily tight credit conditions for purchasing a second home, the market share for vacation and investment homes held steady,” he said.<span style=""> </span>“A sizeable number of buyers made deals with all-cash offerings.”</p> <p class="MsoPlainText">All-cash purchases have become prevalent in the second-home market in recent years:<span style=""> </span>59 percent of investment buyers paid cash in 2010, as did 36 percent of vacation-home buyers.</p> <p class="MsoPlainText">With an overall decline in home sales during 2010, the volume of 543,000 vacation-home sales was down 1.8 percent from 553,000 in 2009.<span style=""> </span>Investment purchases fell 7.8 percent to 867,000 in 2010 from 940,000 the previous year.<span style=""> </span>Primary residence sales declined 5.6 percent to 3.81 million from 4.04 million in 2009.</p> <p class="MsoPlainText">Foreclosure or trustee sales accounted for 17 percent of investment purchases and 11 percent of vacation-home sales in 2010, compared with 5 percent of primary purchases.<span style=""> </span>“Second home buyers purchased more distressed homes at discount than did buyers of primary residences,” Yun said.<p/></p><p class="MsoPlainText">The median vacation-home price was $150,000 in 2010, down 11.2 percent from $169,000 in 2009, while the median investment-home price was $94,000, which is 10.5 percent below the $105,000 median in 2009.<span style=""> </span>By contrast, the median primary residence price declined a relatively modest 4.5 percent to $176,700 last year from $185,000 in 2009. </p> <p class="MsoPlainText">The typical vacation-home buyer in 2010 was 49 years old, had a median household income of $99,500 and purchased a property that was a median distance of 375 miles from his or her primary residence; 31 percent of vacation homes were within 100 miles and 41 percent were more than 500 miles.<p/></p> <p class="MsoPlainText">Investment-home buyers had a median age of 45, earned $87,600 and bought a home that was fairly close to their primary residence – a median distance of 19 miles.</p> <p class="MsoPlainText">“The fall in home prices has opened opportunities for more families to enter the second-home market – the median income of investment buyers today is lower than it’s been in recent years,” Yun said.<span style=""> </span>While the median income of vacation-home buyers in 2010 is slightly above 2007 when it was $99,100, the median income of an investment-home buyer is 5.7 percent below $92,900 in 2007.<p/></p> <p class="MsoPlainText">“Even if purchases are delayed due to economic circumstances, the underlying long-term demand – the desire for purchasing second homes – remains because people in their 30s and 40s will reach the prime age for buying and will drive the second-home market in coming decades as conditions permit,” Yun added.<span style=""> </span></p> <aside class="one-half pull-left inline"><div class="block w-2 h-6 advertisement pull-left"> <aside class="advertisement body variable-ad" data-type="advertisement"> <div class="ad-container body-ad-container"> <div class="ad body-ad ad-300x250" data-ad-unit-refresh="" data-ad-unit-trigger="inview" data-instance-id="c-10346966-p1" data-ad-unit-id="464522" id="openx_adunit_id__464522__364632170" data-ad-strict-view="true"></div> </div> </aside> </div></aside> <p class="MsoPlainText">Currently, 40.7 million people in the U.S. are ages 50-59 – a group that dominated sales in the first part of the past decade and established records for second-home sales.<span style=""> </span>An additional 43.8 million people are now in the primary buying demographic of 40-49 years old, while another 40.4 million are 30-39.<span style=""> </span><p/></p> <p class="MsoPlainText">Lifestyle factors continue to be the primary motivation for vacation-home buyers, with the desire for rental income driving investment purchases.<span style=""> </span>Vacation homes were more likely to be located in a rural area, while investment homes were more likely to be in a suburban location.</p><p class="MsoPlainText">“Vacation-home buyers want the property for their own personal use, with 84 percent saying the primary reason for buying was to use for vacations or as a family retreat,” Yun said.<span style=""> </span>“Rental income generation was the primary motive for investment buyers.<span style=""> </span>At the same time, nearly half indicated they sought to diversify their investments or saw a good investment opportunity.”<p/></p> <p class="MsoPlainText">Thirty-four percent of vacation-home buyers said they plan to use the property as a primary residence in the future, as did 10 percent of investment buyers.</p> <p class="MsoPlainText">Twenty-one percent of investment buyers and 14 percent of vacation buyers purchased the property for a family member, friend or relative to use.<span style=""> </span>“Some of these buyers purchase a home for their son or daughter to use while attending school,” Yun explained.</p> <p class="MsoPlainText">Vacation-home buyers plan to keep their property for a median of 13 years while investment buyers plan to hold their property for a median of 10 years.<p/></p> <p class="MsoPlainText">Thirty-six percent of vacation homes purchased in 2010 were in the South, 27 percent in the West, 19 percent in the Northeast and 15 percent in the Midwest; 3 percent were located outside of the U.S.</p> <p class="MsoPlainText">The distribution of investment properties differed from vacation homes:<span style=""> </span>32 percent were in in the South, 24 percent in the West, 21 percent in the Northeast and 20 percent in the Midwest; 3 percent were purchased outside the U.S.<p/></p> <p class="MsoPlainText">NAR’s analysis of U.S. Census Bureau data shows there are 7.9 million vacation homes and 41.6 million investment units in the U.S., compared with 74.8 million owner-occupied homes.</p> <p class="MsoPlainText">NAR’s 2011 Investment and Vacation Home Buyers Survey, conducted in March 2011, includes answers from 1,895 usable responses about home purchases during 2010.<span style=""> </span>The survey controlled for age and income, based on information from the larger 2010 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.</p> <br/></div> </div> <div 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