Vacation- and investment-home sales set records in 2005, with second home sales accounting for four out of ten residential transactions, according to the National Association of Realtors (NAR).
Vacation home sales increased 17 percent last year to a record 1.02 million. Investment-home sales rose 16 percent to a record 2.32 million.
David Lereah, NAR’s chief economist, said, “. . . the baby boomer generation is driving second home sales – they’re at the optimum point in life when people become interested in second homes, they’re at the peak of their earnings, interest rates remain historically low and boomers want to diversify investments.”
In listing the reasons for purchase, 41 percent of vacation-home buyers said to use for vacations, 31 percent to use as a family retreat and 28 percent to diversify investments. For investment home buyers, 55 percent said rental income was the primary factor for buying, and 35 percent wanted to diversify investments.
One-third of vacation-home buyers and 36 percent of investment-home buyers said it was very likely they would purchase another home, in addition to properties currently owned, within the next two years.