Nearly every day, we read about the increasing popularity of second homes in a remote Mexican seaside town, or the lure of buying a Tuscan villa or the exotic real estate possibilities in Panama. But how many North Americans are actually rolling the dice and choosing to purchase a second home outside the U.S.?
Accurate, tangible data on Americans buying abroad is nearly impossible to find, and the recent National Association of Realtors’ annual Investment and Vacation Home Buyers Survey did nothing to help consumers who seek international second-home statistics. While the survey revealed that domestic vacation-home sales increased 4.7 percent in 2006 to a record 1.07 million, the poll did not contain any questions targeting international purchases.
While NAR indicated that it was possible that some of the 1,412 respondents surveyed in April purchased outside of U.S. borders, “the size of the survey wouldn’t have provided enough meaningful responses.”
According to the U.S. State Department, more than 4 million Americans live abroad, excluding military and government personnel. Mexico is by and far the largest with 25 percent, or 1 million American transplants, followed by Canada with more than 688,000. Central America is not far behind. In fact, an Urban Land Institute study on tourism developments estimated that up to 100,000 Americans live in Costa Rica alone.
However, international Realtors, residential developers and others providing second-home market services now say those numbers are outdated because of the torrid purchasing activity over the past 18 months.
Amada Sturges, director of Escapehomes.com, an online marketplace for buyers and sellers of second homes and resort properties, said the number of Americans interested in purchasing second homes in foreign countries jumped considerably on the site last year.
“More than ever people are looking for better value and natural beauty, both of which are often difficult to find in the U.S.,” Sturges said. “Many international countries, such as Mexico and Nicaragua, are great alternatives and are now making it easier for foreigners to buy and live within their borders.”
Austin, Texas-based HomeAway Inc., an online company specializing in vacation rentals, said its revenue from owner listings was up 50 percent domestically the past year and about 40 percent in Europe. About 18 percent of buyers of vacation homes who participated in the survey stated that they wanted to rent their property to others. That number was up from 13 percent in 2005, according to the NAR report.
“The vacation-home market has been extraordinarily robust here in the States and in Europe over the past four to five years,” said Brian Sharples, founder and CEO of HomeAway. “We thought there would be more of a downturn because the appreciation had not been as high in early 2006 as in previous years, but people are still buying and building.”
HomeAway, which raised a record $160 million last year for acquisitions and marketing, predicts the number of second homes available as vacation rentals will continue to grow rapidly. The company’s portfolio of vacation rental sites includes HomeAway.com, VRBO.com, CyberRentals.com, A1Vacations.com and GreatRentals.com in the U.S., plus Europe’s Holiday-Rentals.co.uk (UK), HolidayRentals.fr (France), Abritel.fr (France), FeWo-direkt.de (Germany) and HomeAway.es (Spain).
“The demographics for second homes are really in the sweet spot for the next few years,” Sharples said. “The boomers’ ages are in the area where they are hitting the top of their incomes and they have been enjoying considerable gains on these types of properties the past few years.”
The NAR survey showed that the typical vacation-home buyer in 2006 was 44 years old, had a median household income of $102,200, and purchased a property that was a median of 215 miles from his or her primary residence. About 42 percent of U.S. vacation homes were closer than 100 miles, and 32 percent were 500 miles or further.
“The NAR survey also did not touch on the number of U.S. vacation homes and resorts that are purchased by Europeans,” Sharples said. “We are seeing a phenomenal number of people from the UK and Germany buying in Florida and in other areas of the East Coast. The demographics are very similar to the age and income brackets in the states.
“However, while we might be thinking our resort prices are expensive, Europeans are looking at us as a bargain. Their pound is now worth close to two bucks. If you can get close to double your money in real estate here, you start to understand that it makes a lot of sense.”
That’s true even if the information is anecdotal. Real estate data that charts purchases by foreigners — anywhere — simply is difficult to find.
To get even more valuable advice from Tom, visit his Second Home Center.