Although recent reports still categorize the housing market in its entirety as sluggish, primarily due to high unemployment and foreclosures, the second-home market is beginning to show increased signs of life. From Palm Beach, Fla. to Big Sky, Mont., on a lake, on the beach or in a secluded golf community, people are making purchases. Predicting and then analyzing the ups and downs of a volatile housing market proves to be difficult, yet extremely low prices in certain vacation spots are attracting buyers again for a variety of reasons.
To support this growth, many sites such as USA Today and the Wall Street Journal are now offering well-trafficked “Second Home Destination” pages. Furthermore, a recent article in the Wall Street Journal highlights the slow rejuvenation of the luxury second home market and lists the top 10 places to buy a second home, going into detail on the specific locations and even celebrity neighbors.
Now you may wonder: How can anyone other than celebrities afford to buy a second home in times like these? The majority of buyers were most likely minimally affected by the sub-prime mortgage crisis and are now taking advantage of low prices — up to 40 percent off the peak. Ideally, what drove the vacation home market in the earlier part of the decade will continue to do so for the years to come: baby boomers.
A BusinessWeek article cited that, in 2009, 39.2 million people in the U.S. were between the ages of 50-59 and an additional 44.8 million people were between 40-49. A very large percentage of vacation homes are purchased by people in these age brackets, which align closely with the baby boomer generation. These boomers are now within their peak earning years or are even moving towards retirement, providing either extra cash or extra time to devote to a second home. While these purchases did drop in 2008 and 2009, there was slight growth in recent months and the long term demand looks favorable.
As aforementioned, the reasons behind purchasing a second home vary. Some people just need a place to get away, relax and spend time with their family. Others use it as an investment, a potential future primary residence or simply to diversify their portfolio. However, investors beware. Although we’ve stopped our downhill slide, it may take quite some time for your new abode to appreciate in value.
So whether you are actually considering purchasing a vacation home (take a look at these tips!) or if it is just wishful thinking, take some time to check out these sites and enjoy the fact that while prices are down, this market is looking up.
Photo courtesy of Alex. E Proimos on Flickr