The Second Home Market has changed a lot since the Douglas Fir Plywood Association published Second Homes for Leisure Living in 1960. Today, millions of Baby Boomers in the United States (40.7 million between the ages of 50-59) have spending power and are preparing to retire, and many are predicted to enter the vacation home and second home markets over the next few years to look for vacation properties or make sound investments. A number of second-home buyers are targeting discounted and distressed properties that will serve as vacation homes and potentially full-time residences later in life. Baby Boomers are snapping up property near their children who may be grown and starting their own lives away from home. A segment of second-home buyers are also turning to real estate as a far better investment than banks and the stock market.
Second-Home Buyers | Vacation
The NAR’s Investment and Vacation Home Buyers Survey revealed that in 2011, sales of vacation homes climbed 7% with 40% of buyers paying in cash – both big incentives for REALTORS® looking to get into a growing segment of the real estate market. The typical vacation-home buyer was 50-years-old, making $88,600 and living a median distance of 305 miles from their vacation home, while 35% percent of vacation homes were within 100 miles and 37% were more than 500 miles from the primary residence.
REALTORS® need to be aware that vacation-home buyers are emotional purchasers who are looking for a connection to a property, which are primarily found in suburban or rural areas. Buyers will picture winters or summers in this second home and REALTORS® who can deliver these emotions will find much more success. Only 22% of vacation-home buyers said they planned to rent to others when not using the property, so be aware of the angles you take when marketing to vacation buyers.
Second-Home Buyers | Investment
Vacation homes aren’t the only source of second-home purchases. Second-home sales for investment real estate climbed by more than 64% in 2011 with 1.23 million transactions. The average investment buyer was 50 years old and earned nearly $86,100, living a median of 25 miles from the purchase site.
This type of second-home buyer is much more rational and will be swayed by data and investment information more than by emotional hooks. More than half of all investment buyers are looking to capitalize on renting their second properties, which offer more return than interest earned in financial institutions. Investment buyers often don’t stop at just one second property. Forty-one percent of investment buyers purchased more than one property in 2011, with nearly half paying with cash, so that first sale may not be your last with each client.
A few final tips to keep in mind:
- The second-home market is highly specialized and REALTORS® need to know their stuff before getting too far involved. Earning the NAR’s Resort and Second-Home Property Specialist (RSPS) certification will help REALTORS® learn the growing second-home market and connect with a growing list of colleagues who specialize in vacation and second-home real estate.
- The Baby Boomer demographic owns the largest percentage of two or more homes and they’re looking to purchase vacation property in smaller towns and communities that are secure, close to shopping, travel and good healthcare facilities, and offer a nice living climate.
- Second-home buyers use the internet to do a lot of their real estate research, especially because many properties are a decent distance from their primary residences. Offering plenty of photos and video of properties, and marketing specifically to the second-home market will increase your chances of being seen and considered.
What are your experiences in the second-home market? Are you seeing more vacation-home buyers or investment buyers in your area? Share your experiences in the comments below.