Second-Home Survey Shows Solid Market

Washington, DC, May 12, 2006--A new survey of second-home owners by the National Association of Realtors shows baby boomers continue to dominate the market, and a growing number of second homes, and that more than one in ten are owned by minorities. A surprising majority of respondents own multiple properties in addition to their primary residence. David Lereah, NAR’s chief economist, said the market continues to be dominated by the baby boom generation. “Middle-aged, middle-income households are the driving factor in the second-home market, with favorable demographics providing a solid fundamental demand in this sector for the next decade,” Lereah said. “Boomers believe in diversifying their assets, and most second-home owners see their purchase as being a better investment than stocks. A surprising majority of survey respondents hold multiple properties, and they are interested in purchasing additional homes.” About six in ten respondents own two or more homes in addition to their primary residence. Minorities have become more active in the market, accounting for 11 percent of vacation home purchases between 2003 and 2005 in contrast with 6 percent of purchases in 2002 or earlier. In the investment property segment, minorities accounted for 17 percent of transactions between 2003 and 2005 compared with 11 percent in 2002 or earlier. An unexpectedly high number of vacation-home owners, 21 percent, own two or more vacation homes. In addition, 34 percent of vacation-home owners report they own two or more investment properties. More than half of investment property owners, 53 percent, own two or more investment homes and 12 percent own two or more vacation homes. Analysis of U.S. Census Bureau data shows there are 6.8 million vacation homes in the United States and 37.4 million investment units in addition to 74.6 million owner-occupied units. NAR President Thomas M. Stevens from Vienna, Va., said the term “second home” appears to be something of a misnomer. “The fact that so many owners of vacation homes and investment property have additional properties is a bit of a revelation,” said Stevens, senior vice president of NRT Inc. “We’ve always known that a certain segment has invested heavily in the rental market, and some people earn their living simply by holding and managing investment property. What we see now is a crossover between largely vacation- and investment-home owners, with people recognizing the value of those investments and pouring more assets into real estate,” Stevens said. The typical vacation-home owner is 59 years old, earned $120,600 last year, and purchased a property that is 220 miles from their primary residence, but 34 percent were less than 100 miles and another 34 percent were 500 miles or more. Eight out ten drive to their property, and half of vacation homes are located within the same state as the owner’s primary residence. Eighty-three percent of owners are married couples. Three-fourths of vacation-home owners purchased for personal use, although one-third also wanted to diversify investments, and 18 percent intended that the home would become a primary residence in retirement. Only 13 percent of vacation owners listed rental income as a reason to buy. The typical owner spends 39 nights per year at their property, and three-quarters do not rent out. Of those who do rent their vacation home, the median number is 12 nights per year. The median age of an investment owner is 55, with an income of $98,600 in 2005; 75 percent of owners are married couples. Their investment property is located close by, within a median distance of 10 miles. - continued -