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Vacation-home sales fall from record high
By Amy Hoak/MarketWatch (MCT)
CHICAGO -- After hitting a record in 2006, sales of vacation homes declined last year as would-be buyers held off purchasing retreats, the National Association of Realtors said Friday.
Vacation-home sales fell 30.6 percent to 740,000 in 2007, from 1.07 million in 2006, according to the group's annual Investment and Vacation Home Buyers Survey.
And speculators continued to exit the market: Homes bought purely for investment dropped 18.1 percent to 1.35 million last year, compared with 1.65 million in 2006, the survey said.
That compares to a 10 percent decline in primary-residence sales, to 4.34 million in 2007 from 4.82 million in 2006. Vacation- and investment-home sales combined accounted for 33 percent of all home sales last year, down from a 36 percent share in 2006, the group said.
Uncertainties in the economy are likely causing people to stall their second-home plans, said Lawrence Yun, NAR's chief economist.
"Second homes are discretionary purchases and there is a natural tendency to pull back from big-ticket items in periods of uncertainty," Yun said, in a news release. "The other factor is the disruption in the mortgage market, with a significant tightening of credit during the second half of 2007. Some buyers simply adopted a wait-and-see attitude."
Yun said that investment-home sales dropped sharply in 2006 as speculators began to disappear from the market. That trend continued into 2007, he added.
But vacation-home sales hit a record in 2006 because there was pent-up demand from buyers who couldn't find a property in previous years when supplies were tight, Yun said. That trend didn't spill over into the 2007 numbers.
Still, though sales for vacation homes were down last year, demographics suggest there is still some "dormant underlying demand," Yun said.
"A peak of population is moving through the prime years for buying recreational property," he said. The typical vacation-home buyer in 2007 was 46 years old with a median household income of $99,100, according to the survey.
Those who did buy vacation homes last year saw more affordable prices. The median price of a vacation home was $195,000 in 2007, down 2.5 percent from $200,000 in 2006, according to NAR. Twenty-eight percent of vacation-home buyers made the purchase with cash.
Also, there was a shift last year in the type of vacation homes buyers purchased, with a greater share of them buying condominiums.
Twenty-nine percent of vacation-home sales last year were condos, up from 21 percent in 2006. And 59 percent of vacation-home sales were detached single-family homes in 2007, down from 67 percent in 2006. In 2007, 7 percent of vacation-home sales were townhouses or row houses, and 5 percent were classified as "other."
Forty-one percent of vacation homes purchased last year were in the South, 24 percent in the West, 19 percent in the Northeast and 16 percent in the Midwest.
Sixty-one percent of investment homes bought last year were detached single-family homes and 20 percent were condos. Townhouses or row houses made up 11 percent of investment sales, and 8 percent of purchases were classified as "other."
The most popular spot to buy an investment home was in the South; 38 percent of investment sales occurred there in 2007. Twenty-three percent of investment homes bought last year were located in the Northeast, 21 percent in the West and 19 percent in the Midwest.
A typical investment property cost $150,000 in 2007, unchanged from 2006, and the typical buyer was 42 years old with a household income of $92,900. Thirty-five percent of them paid cash for the property.
© 2008, MarketWatch.com Inc.
Visit MarketWatch on the Web at http://www.marketwatch.com
Distributed by McClatchy-Tribune Information Services.
Subscribe To Lake AlertsVacation-home sales fell 30.6 percent to 740,000 in 2007, from 1.07 million in 2006, according to the group's annual Investment and Vacation Home Buyers Survey.
And speculators continued to exit the market: Homes bought purely for investment dropped 18.1 percent to 1.35 million last year, compared with 1.65 million in 2006, the survey said.
That compares to a 10 percent decline in primary-residence sales, to 4.34 million in 2007 from 4.82 million in 2006. Vacation- and investment-home sales combined accounted for 33 percent of all home sales last year, down from a 36 percent share in 2006, the group said.
Uncertainties in the economy are likely causing people to stall their second-home plans, said Lawrence Yun, NAR's chief economist.
"Second homes are discretionary purchases and there is a natural tendency to pull back from big-ticket items in periods of uncertainty," Yun said, in a news release. "The other factor is the disruption in the mortgage market, with a significant tightening of credit during the second half of 2007. Some buyers simply adopted a wait-and-see attitude."
Yun said that investment-home sales dropped sharply in 2006 as speculators began to disappear from the market. That trend continued into 2007, he added.
But vacation-home sales hit a record in 2006 because there was pent-up demand from buyers who couldn't find a property in previous years when supplies were tight, Yun said. That trend didn't spill over into the 2007 numbers.
Still, though sales for vacation homes were down last year, demographics suggest there is still some "dormant underlying demand," Yun said.
"A peak of population is moving through the prime years for buying recreational property," he said. The typical vacation-home buyer in 2007 was 46 years old with a median household income of $99,100, according to the survey.
Those who did buy vacation homes last year saw more affordable prices. The median price of a vacation home was $195,000 in 2007, down 2.5 percent from $200,000 in 2006, according to NAR. Twenty-eight percent of vacation-home buyers made the purchase with cash.
Also, there was a shift last year in the type of vacation homes buyers purchased, with a greater share of them buying condominiums.
Twenty-nine percent of vacation-home sales last year were condos, up from 21 percent in 2006. And 59 percent of vacation-home sales were detached single-family homes in 2007, down from 67 percent in 2006. In 2007, 7 percent of vacation-home sales were townhouses or row houses, and 5 percent were classified as "other."
Forty-one percent of vacation homes purchased last year were in the South, 24 percent in the West, 19 percent in the Northeast and 16 percent in the Midwest.
Sixty-one percent of investment homes bought last year were detached single-family homes and 20 percent were condos. Townhouses or row houses made up 11 percent of investment sales, and 8 percent of purchases were classified as "other."
The most popular spot to buy an investment home was in the South; 38 percent of investment sales occurred there in 2007. Twenty-three percent of investment homes bought last year were located in the Northeast, 21 percent in the West and 19 percent in the Midwest.
A typical investment property cost $150,000 in 2007, unchanged from 2006, and the typical buyer was 42 years old with a household income of $92,900. Thirty-five percent of them paid cash for the property.
© 2008, MarketWatch.com Inc.
Visit MarketWatch on the Web at http://www.marketwatch.com
Distributed by McClatchy-Tribune Information Services.
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