*Second Home Sales Soar*
**By Lew Sichelman**
***It’s summer time and the livin’ is easy – among vacation home buyers and sellers, that is. According to the latest report from the National Association of Realtors, sales of vacation homes – new and existing recreational property purchased primarily for personal use – rose 10.1 percent in 2012, from 502,000 deals in 2011 to 553,000 in 2012.
****So things are picking up in the whole-ownership category. Not so much when it comes to piecemeal real estate, according to Dick Ragatz, a Eugene, Ore., researcher who kicked off a recent conference call by saying, “I wish I had better news.”
****Ragatz, who said he cancelled his annual symposium because of a lack of sponsorship, told listeners on their phones that while there are “some glimmers of hope on the horizon,” his latest report on the shared-ownership business “is going to sound like a broken record” of the last four years.
****“2012 was not a good year,” he reported.
But whole-ownership is another story, and an important one for lenders and other real estate professionals looking to find a profitable market niche.
****Here are some tidbits from NAR’s latest vacation home buyers survey:
****>> Second properties accounted for a significant 11 percent of all real estate transactions last year. That’s unchanged from 2011, but with the entire market on the upswing, the vacation segment held its own.
****>> All-cash deals were common, but financing is necessary to complete many transactions. Some 46 percent of vacation home buyers purchased without funding from outside sources, which means 54 percent used a mortgage.
****>> Buyers who did need financing put a significant amount of their own money – 27 percent – into the deal.
****>> 35 percent of the vacation homes, which changed hands in 2012 were distressed properties.
****>> Similar to the primary home market, vacation home prices rose last year – but far more substantially. The median price paid for a second home last year rose from $121,300 in 2011 to $150,000 in 2012. Of course, that nearly 24 percent jump reflects a greater number of more expensive recreational property sales. But it also shows the market’s strength.
****>> 78 percent of all second-home buyers said it was a good time to buy, compared with 68 percent of primary residence buyers. “This suggests that second-home buyers tend to be a step ahead of general buyers in sensing a market recovery,” said Lawrence Yun, NAR’s chief economist.
****>> The typical vacation home buyer was 47 years old, had a median household income of $92,100 and purchased a property that was a median distance of 435 miles from his or her primary residence. But a little more than a third of vacation homes were within 100 miles.
****>> Buyers plan to own their recreational property for a median of 10 years.
****>> Lifestyle factors are the primary motivation for second home purchasers – 80 percent intend to use the property for vacations or as a family retreat, 27 percent plan to use it as a primary residence in the future, 23 percent plan to rent to others and 23 percent wanted to diversify their investments or saw a good investment opportunity.
****>> Suggesting there is a significant move-up market among vacation home owners, 29 percent said they were likely to purchase another second home within two years.
****>> The Census Bureau counts some 7.9 million vacation home nationwide. NAR found that 45 percent of those purchased last year were in the South, 25 percent in the West, 17 percent in the Northeast and 12 percent in the Midwest.
Lew Sichelman has been covering the housing and mortgage markets for more years then he cares to remember, starting as real estate editor at the long defunct Washington Daily News and Washington Star newspapers and finishing with a three-decade stint with National Mortgage News. His weekly column, The Housing Scene, is syndicated to newspapers throughout the country.