April 12, 2010 by cloeffler ·

While they dominated the housing market in 2009, first time home buyers weren’t the only ones taking advantage of low mortgage rates and affordable home prices.

According to recent survey by the National Association of Realtors®, the number of people buying second properties as vacation homes rose 7.9 percent to 553,000 in 2009 from 513,000 in 2008.

The market share for vacation homes rose to 10 percent, from 9 percent in 2008, and the median home price for a vacation home was 169,000 dollars in 2009, compared to 150,000 dollars in 2008.

NAR Chief Economist Lawrence Yun said the higher home prices reflects increased sales in higher priced markets like Florida and California, where home prices “became highly attractive for buyers over the past year.”

Half of vacation homes purchased last year were in the South, 21 percent in the West, 17 percent in the Midwest and 12 percent in the Northeast.

Investment Buyers and Sales
While vacation home sales reflected an increase, investment home sales continued their decline.

The market share of homes purchased for investment was 17 percent in 2009, down from 21 percent in 2008. The median investment property sold for 105,000 dollars last year, down 2.8 percent from 108,000 dollars in 2008.

Yun said that unlike vacation home buyers, who were making a lifestyle choice, investment buyers’ primary goal was to seek rental incomes. Six out 10 investors plan to rent to others, he said.

The survey also found that there was a higher share of condos in investment sales: 27 percent of investment homes were condos vs. 21 percent of vacation homes. Most of the investment sales are in the West.

Yun said this was consistent with reports in California of a high share of all-cash purchases, notably in lower price ranges.

All Cash Sales
Cash sales made a big portion of the second home market. Instead of taking out a mortgage loan or refinancing, a majority of second and investment home buyers paid cash.

According to the survey, three out of 10 vacation-home buyers in 2009 paid cash for their properties, while half of investment buyers paid cash.

And despite the recession and the housing market crash, both groups said good investment opportunities factored into their decision to purchase a second home.

April 2, 2010 | By Nicole Service