Editor’s note: The second-home or vacation-home market is a booming niche that’s vastly different than the market for primary homes. Many foreign buyers are playing a larger role in second-home purchases in the U.S., while many domestic buyers are crossing the border for their second homes. In this three-part series, we examine the fast evolving second-home market, looking at the trends of foreign buyers coming to the U.S., U.S. buyers looking outside the borders, and how booming second-home markets impact affordability for everyone else. (See Part 1: Florida says ‘cheerio,’ ‘hola’ to international real estate buyers and Part 2: Priced out of paradise.)
The traditional vision of a second home was a cabin close to the shore of Dad’s favorite fishing lake or a condo on the fairway of Dad’s beloved golf course in the desert.
That’s no longer the case. Aging baby boomers, who have redefined every aspect and item of their life cycle ranging from jeans, to cars, to home design, also are redefining the second-home market. The healthiest, wealthiest and largest group ever to surface on the American landscape is borrowing more, traveling further and purchasing additional real estate sooner in life. They are more adventuresome than their parents who comprised the pay-it-off, stay-close-to-home Greatest Generation. To the contrary, boomers never met a loan they didn’t like and are proud to journey to distant lands to buy and declare “this is not your father’s second home.”
Boomers are buying abroad in droves, spearheaded by memories of rediscovering their spring break Mexican haunts of 30 years ago or a romp in the Italian countryside with their partner before children cluttered their last two decades. Some of these people are the same movers and shakers who built their large homes on small lots in the 1980s and their gate-guarded castles in the 1990s.
Now, armed with more home equity than they had ever dreamed possible, boomers are being romanced by stories like those contained in the Frances Mayes book (and the movie made from it) “Under the Tuscan Sun” and investing in property jammed with intrigue, adventure and fun. They are seeking the “cool factor” of dealing with foreign laws, craftsman and culture.
No specific data is available to ascertain the number of Americans who currently own second homes outside the United States. According to the U.S. State Department, approximately 4 million U.S. citizens live abroad – not including embassy and military personnel – yet that number could also include second-home buyers. While some 380,000 Social Security retirement checks go to citizens outside the U.S. each month, many part-time international residents receive their checks in the states, have them deposited into U.S. bank accounts or are simply too young to receive them.
The move toward international second homes comes as no surprise to the analysts who have tracked the boomer bracket for decades. In an effort to pinpoint factors for the potential size and shape of domestic homes, Shea Homes completed a survey asking baby boomers whether they were politically active, involved with their children’s educational experience, and how often they had guests over for dinner. According to the findings, the assumption that boomers are politically active is incorrect. The huge group that once protested, waved banners and flashed the peace sign has not remained politically involved.
“The results were surprising because of the perception we still retain of the1960s,” said Eric Snider, Shea Homes’ marketing director for Trilogy, the company’s upscale active adult communities. “People immediately shift their minds to that decade when boomers even begin to be mentioned. After the war, boomers put their signs down, went home and essentially turned on their televisions,” Snider said.
The most surprising revelation in the Shea data was that boomers are no longer social beings. According to Snider, the group once known to say, “pass me the joint, let’s go get stoned” is no longer so inclusive.
“They have retreated to their homes and away from society,” Shea said. “Yet, that is not their reality at all.”
More and more of those homes are out of the country. Realtors in Spain, Bulgaria, Costa Rica, Belize, France and Germany are among the sales professionals reporting an increased number of U.S. buyers – and with them rising sales prices.
But before boomers take the leap overseas, a word of advice: Conduct a genuine reality check first. If boomers spent many happy hours on vacation with their families in a particular spot, they might want to return there and buy a home in the same location. This is a legitimate wish, but boomers should consider how important this is to them.
Also, sometimes you can’t go home again. Prices have risen, congestion has increased and many of the things fondly remembered may have disappeared. More importantly, if the second home is to provide real satisfaction, it must meet the needs of the whole household. Even a seemingly familiar place requires investigation. Don’t let nostalgia take precedence over the more important considerations of the present.
Tom Kelly’s new book “Cashing In on a Second Home in Mexico: How to Buy, Sell and Profit from Property South of the Border” was co-written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores and at TomKelly.com.
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