Vacation-Home Sales Hit Record;
Investment Purchases Fall

A sharp drop in investment-home sales offset a record number of vacation-home purchases to bring down the overall number of second-home purchases in 2006, the National Association of Realtors reported.

Vacation-home sales rose 4.7% to a record 1.07 million homes in 2006 from 1.02 million in 2005. Investment-home sales fell 28.9% to 1.65 million homes in 2006 from 2.32 million in 2005, according to the group's annual survey of investment- and vacation-home buyers.

The share of second-home sales was 36% of all existing and new residential real-estate transactions in 2006, down from 40% of all sales in 2005, the group said. Primary-residence sales fell 4.1% in 2006 to 4.82 million from 5.02 million.

The median price of a vacation home was $200,000 in 2006, down 2% from $204,100 in 2005. Investment-home prices were also down, with the typical home costing $150,000 last year, down 18.3% from $183,500.

The profile of a typical vacation-home buyer in 2006 was someone 44 years old with a median household income of $102,200, according to the NAR. Typically, these vacation homes were a median of 215 miles from the owner's primary residence, though 42% of vacation homes were closer than 100 miles and 32% were at least 500 miles away.

According to the report, 79% of vacation-home buyers wanted the property as a vacation or family retreat, 34% wanted to use the property to diversify their investments, 28% planned to use it as a primary residence in the future, 25% were motivated by tax benefits, 22% intended for a family member or friend to use the property, 21% said they bought because they had extra money to spend, and 18% plan on renting the property to others.

The most popular location for the homes was in rural areas; 29% of the homes were purchased in the country. But 24% were located in resorts, 22% in a suburb and 10% in an urban area or central city. Sixty-seven percent of the homes were detached single-family houses, 21% were condos and 8% were townhouses or row houses.

Investment-home buyers were younger and earned less than vacation-home buyers.

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