Latest Trends With Second Homes
Let’s take a moment to highlight some of the recent trends we’re seeing lately with second home purchases. Interestingly, the numbers have been rising in the last year.
In fact, the market share of people buying investment and vacation homes in the last year has reached its highest level since 2005 and 2005, if you recall, was during those housing boom days. That statistic comes from a recent report from the NATIONAL ASSOCIATION OF REALTORS® and its 2012 Investment and Vacation Home Buyers Survey.
8 out of 10 second home buyers say now is the right time to buy. Why?
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Housing affordability–which we’ve mentioned before on this show–is through the roof, at record highs. That’s made those in the market for a second home want to pounce on prices, whether it’s a second home purchase intended as a future home for retirement, a vacation home, or even an investment property.
Investment home sales alone surged a whopping 64 percent last year compared to the previous year. Vacation-home sales rose 7 percent.
More and more of these deals are all-cash. 42 percent of vacation home buyers and 49 percent of investors made their second home purchases all in cash, meaning no financing was needed with a mortgage.
If you don’t have all-cash, does that mean you have to miss out on these bargains? Certainly not. Others are still finding they can get a second home too.
For those who are financing their purchases with a mortgage, they’re coming with fairly large down payments. The median down payment in 2011 for second home purchases was 27 percent of the purchase price, according to the REALTOR® survey.
So how much are people spending on these purchases … and can you have one? Yes, you can.
For investment homes, the median price was one hundred thousand dollars in 2011. The median vacation-home price, the price point where one-half of the investment homes sold for higher and one half sold for lower was one hundred and twenty thousand dollars, that’s down by nearly 20 percent compared to 2010. That decrease in median price may reflect a few things, possibly people are being more cautious about their spending with vacation homes or maybe it’s they don’t need to spend any more–they can get more for their money now than just a few years ago.
Second home buyers are increasingly purchasing distressed properties–those in foreclosure or in short sale situations, where the discounts tend to be greater. About half of all investment home purchases last year were distressed properties, whereas 39 percent of vacation homes were.
And second homes aren’t always just a place to retreat or vacation either–they can be a money-maker. Investors of second homes are discovering that these real estate investments can offer higher returns than other investments. That’s because an increase in rental income recently has been making these deals sweeter.
Maybe that’s why more second home buyers are saying one home is just not enough. They want more.
41 percent of investment buyers purchased more than one property last year. One-third of vacation home buyers say they too would like to buy another property within two years.
Now, that’s taking advantage of the market.
The most popular spot for vacation and investment second home buys? The sunny South, followed by the West.
Indeed, the second home market is heating up … is it time for you to jump in?