Second-home sales mixed in 2006

NAR’s annual Investment and Vacation Home Buyers Survey shows vacation-home sales rose 4.7 percent to a record 1.07 million in 2006 from 1.02 million in 2005, while investment-home sales fell sharply, down 28.9 percent to 1.65 million in 2006 from a record 2.32 million in 2005. By contrast, primary residence sales fell 4.1 percent to 4.82 million in 2006 from 5.02 million in 2005.

According to the survey, 22 percent of all homes purchased last year were for investment, down from a market share of 28 percent in 2005. Another 14 percent were vacation homes, up from a 12 percent market share in 2005.

“We expected the drop in investment sales because speculators left the market in 2006, which caused investment sales to fall much faster than the primary market,” NAR Chief Economist David Lereah in a news release. “But the rise in vacation-home sales is based on strong demographic and lifestyle factors.”

The typical vacation-home buyer in 2006 was 44 years old, had a median household income of $102,200, and purchased a property that was a median of 215 miles from their primary residence. Also, 42 percent of vacation homes were closer than 100 miles and 32 percent were 500 miles or farther than the buyers’ primary residences.

“Second homes are really something of a misnomer because a fair number of respondents buy multiple properties,” Lereah said, noting that 86 percent of vacation buyers purchased one vacation home, 12 percent purchased two homes and 2 percent purchased three or more vacation properties.

NAR’s 2006 Investment and Vacation Home Buyers Survey, conducted in April, was based on answers from 1,412 respondents, reflecting 1,729 homes purchased in 2006.