April 1st, 2009 2:21 PM by Sherry Lee
From Real Time Economics blogger Phil Izzo:
The share of homes purchased as vacation residences or investment properties dropped to 30% of all sales in 2008 from 33% in 2007, according to the National Association of Realtors. However, amid continued gloom in the housing market, it raises the question of who still is investing in real estate.
Vacation-home buyers appear to be taking advantage of reduced prices, and are more interested in long-term value than investment. According the NAR, vacation-home buyers plan to keep their property for a median of 12 years, with 58% planning not to sell for 11 years or more. Meanwhile, the median price of a vacation home was $150,000 last year, down from $195,000 in 2007. Under these circumstances, buying a second home in a downturn makes sense. Even if the market continues to struggle, the value of the home comes from its use not as an investment.
However, more second homes were bought as investments than for use as a vacation retreat. Vacation-home sales dropped 31% to 512,000 last year, while investment-home sales fell just 17.2% to 1.12 million, the NAR said. By comparison, primary-residence sales declined 13% to 3.77 million in 2008.