The truth behind second-home slowdown

New loan rules, spending habits reshape market

While sales activity in the second-home market has been dinged by the loss of home equity in primary residences, leaders involved in second-home finance say the real problem lies elsewhere.

Bob Waun, managing director of Americor Mortgage/Vacation Finance and a board member of the Condo Coalition, an advocacy group for homeowners associations, said financing — not demand — is the reason vacation property sales are in the doldrums.

"Absorption has been exasperated by the lack of financing for echo boomers and baby boomers who wish to (buy) but cannot without significant cash outlays," Waun said. "If we can fix the condo rules, we can fix the entire market. And it will cost taxpayers absolutely nothing. All we need is some air cover."

Lenders have increased their guidelines regarding second-home loans. Many now require a minimum down payment of 35 percent of the purchase price and are discounting the portion of rental income produced by potential renters. In addition, most lenders require that at least 70 percent of a condominium’s units be owner-occupied.