The share of second-home purchases among all home sales fell to 30 percent, according to the latest annual National Association of Realtors survey, down from 33 percent in the 2007 survey and 40 percent in 2005.
Sales of primary residences dropped 13.2 percent from 2007 to 2008, while sales of vacation homes fell 30.8 percent and sales of investment homes fell 17.2 percent during the same period, NAR reported.
Buyers of second homes appear to be more bargain-hungry than buyers of primary residences.
The median sales price of primary residences dropped -1.8 percent from 2007 to 2008, while the median sales price plunged more dramatically for vacation properties (-23.1 percent) and investment properties (-28 percent).
The median sales price of a primary residence was $196,000 in 2008, compared with $150,000 for vacation properties and $108,000 for investment properties, according to NAR.
In 2006, the share of vacation-property sales was 14 percent, according to an earlier NAR survey, and that share declined to 12 percent in 2007 and 9 percent in the latest survey. Meanwhile, the share of investment-property purchases was 22 percent in the 2006 survey (down from 28 percent in 2005) and was 21 percent in the 2007 and 2008 surveys.
Conducted in March 2009, the latest survey ("2008 Investment and Vacation Home Buyers Survey") is based on responses from 1,924 participants.
There are 8.1 million vacation homes and 40.5 million investment units in the U.S., compared with 75.5 million owner-occupied homes, NAR reported, based on an analysis of U.S. Census Bureau data.
"We expected vacation-home sales to fall given the impact of a declining economy on discretionary purchases," said Lawrence Yun, NAR’s chief economist, in a statement. "A steady share of investment-home sales results from buyers taking advantage of deeply discounted prices in many areas, with a smaller portion of new homes in the sales mix."
Yun added that demographics appear to be good news for future sales of second homes, with a large wave of 40-somethings (44.8 million) and 30-somethings (40.7 million).
"Given that most people become interested in buying a second home in their 40s, the bulge of population approaching middle age should drive the second-home market over the next decade," Yun stated. …CONTINUED
NAR reported that the typical buyer of a vacation home in 2008 was 46, with a median household income of $97,200 — buyers purchased a property a median 316 miles from their primary residence, with 35 percent buying within 100 miles and 36 percent buying a property 500 miles or more away.
About 70 percent of vacation homes purchased in 2008 were detached, single-family homes, while 18 percent were condos, 5 percent were townhouses or row houses, and 7 percent were other types of homes.
About 69 percent of vacation-home buyers bought resale homes, compared with 84 percent of investment-home buyers.
NAR reported that investment-home buyers in the latest survey had a median age of 47, earned $85,000 and bought a home that was a median 19 miles away from the primary residence.
About 64 percent of investment homes bought in 2008 were detached, single-family homes, with 22 percent condos, 8 percent townhouses or row houses, and 6 percent homes of another type.
About 58 percent of vacation-home buyers plan to hold onto their property for 11 years or more, with a median of 12 years.
NAR is offering the full survey report free to NAR members and at a cost of $125 for nonmembers (www.realtor.org/newresearch).
Jennifer Howard, a real estate agent for Prudential Coastal Properties in Destin, Fla., told Inman News that she saw a surge in investment activity in her market area last year, though there is now a different trend.
"Last year, buyers I worked with were overwhelmingly investment buyers interested in good buys on waterfront properties," she said. "These days I see more end users and pre-retirement buyers, who tend to be very generational and family-oriented in their decision-making."
Buyers are typically from the Southeastern U.S., she said, and buyers "are gravitating to planned resort communities in our area …. (they) love the notion of being able to arrive at their second home, park their car, and be able to walk, bike, boat or take a golf cart to restaurants, shops and services." …CONTINUED
Beachfront condos are also a popular property type for second-home buyers, she said, especially those "low-rise, high-end" units.
A new international airport under construction in the area should give a lift to the real estate market, she added.
Geordie Romer, a real estate agent in Leavenworth, Wash., east of Seattle, said home sales are down by about 50 percent compared to last year while prices have been holding fairly steady for the past few years.
Romer mostly sells vacation homes to Seattle-area residents, and he said the condo market was overbuilt and had been overpriced in his market area.
The market for vacation cabins, meanwhile, is stronger. "Very few cabins have been built on speculation and we do not have an oversupply of new-construction homes," Romer said.
"I am seeing our market mostly affected by a crisis in confidence. Vacation-home buyers hear that we are having an economic collapse and have seen damage to their portfolio, but aren’t really feeling or seeing the downturn. However, they are worried that something worse is coming."
He added, "I think that the very bottom of our vacation market has gone away and that many buyers have downsized their vision and are buying homes a little more modest than in years before."
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