Vacation Home Sales Hold Steady in 2010

Washington, DC, April 1, 2011 -- The share of homebuyers purchasing second homes remained steady in 2010 compared to the year before, though overall sales volume declined somewhat, according to an annual report from the National Association of Realtors.

NAR's 2011 Investment and Vacation Home Buyers Survey includes 1,895 responses from households who bought residential real estate in 2010. The association conducted the survey in March 2011 and controlled for age and income.

The survey found that second-home purchases declined at the same rate as primary home purchases in 2010, both dropping 5.6%. Investment properties saw the bulk of that decline, falling 7.8%, compared to a 1.8% decline for vacation homes.

The%ages of investment purchases and vacation-home purchases to overall purchases remained the same as in 2009, at 17% and 10%, respectively.

NAR Chief Economist Lawrence Yun said, “Despite extraordinarily tight credit conditions for purchasing a second home, the market share for vacation and investment homes held steady,” he said. “A sizeable number of buyers made deals with all-cash offerings.”

All-cash purchases have become prevalent in the second-home market in recent years: 59% of investment buyers paid cash in 2010, as did 36% of vacation-home buyers.

With an overall decline in home sales during 2010, the volume of 543,000 vacation-home sales was down 1.8% from 553,000 in 2009. Investment purchases fell 7.8% to 867,000 in 2010 from 940,000 the previous year. Primary residence sales declined 5.6% to 3.81 million from 4.04 million in 2009.

Foreclosure or trustee sales accounted for 17% of investment purchases and 11% of vacation-home sales in 2010, compared with 5% of primary purchases. “Second home buyers purchased more distressed homes at discount than did buyers of primary residences,” Yun said.

The median vacation-home price was $150,000 in 2010, down 11.2% from $169,000 in 2009, while the median investment-home price was $94,000, which is 10.5% below the $105,000 median in 2009. By contrast, the median primary residence price declined a relatively modest 4.5% to $176,700 last year from $185,000 in 2009.