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WASHINGTON (April 2, 2013) – Vacation home sales improved in
2012, while investment purchases remained elevated for a second consecutive
year, according to the National Association of Realtors®.
NAR’s 2013 Investment and Vacation
Home Buyers Survey,* covering existing- and
new-home transactions in 2012, shows vacation-home sales rose 10.1 percent to
553,000 from 502,000 in 2011. Investment-home sales declined 2.1 percent
to 1.21 million from 1.23 million in 2011, but those sales had been well under
a million during the market downturn. Owner-occupied purchases jumped
17.4 percent to 3.27 million last year from 2.79 million in 2011.
Vacation-home sales accounted for 11 percent of all transactions
last year, unchanged from 2011, while the portion of investment sales was 24
percent in 2012, down from 27 percent in 2011, marking the second highest share
since 2005.
NAR
Chief Economist Lawrence
Yun said favorable conditions are driving second-home sales.
“We had a strong stock market recovery, which helps more people in the prime
ages for buying vacation homes. Attractively priced recreational property
is also a big draw,” he said.
Yun notes an ongoing investor presence. “Investors have
been very active in the market over the past two years, attracted mostly by
discounted foreclosures that could be quickly turned into profitable rentals,”
he said. “With rising prices and limited inventory, notably in the low
price ranges, investors are likely to step back in coming years.”
The median investment-home price was $115,000 in 2012, up 15.0
percent from $100,000 in 2011, while the median vacation-home price was
$150,000, compared with $121,300 in 2011, reflecting a greater number of more
expensive recreational property sales in 2012.
All-cash purchases remain common in the investment- and
vacation-home market: half of investment buyers paid cash in 2012, as did 46
percent of vacation-home buyers. Forty-seven percent of investment homes
purchased in 2012 were distressed homes, as were 35 percent of vacation homes.
Of buyers who financed their purchase with a mortgage in 2012,
large downpayments remain typical. The median downpayment for both
investment- and vacation-home buyers was 27 percent, the same as in 2011.
Investment-home buyers in 2012 had a median age of 45, earned
$85,700 and bought a home that was relatively close to their primary residence
– a median distance of 21 miles, although 29 percent were more than 100 miles
away. Thirty-five percent of investment buyers purchased more than one
property.
“Property flipping modestly increased in in 2012,” Yun
said. “However, this isn’t flipping in the sense of what took place
during the housing boom. Rather, investors generally are renovating and
improving properties before placing them back on the market to resell at a
profit.”
Six percent of homes purchased by investment buyers last year
have already been resold, and another 8 percent are planned to be sold within a
year. In the 2011 study, 5 percent of investment homes were already
resold, and 8 percent were planned to be sold within a year. Overall,
investment buyers plan to hold the property for a median of 8 years, up from 5
years in 2011.
Seventy-eight percent of all second-home buyers said it was a
good time to buy, compared with 68 percent of primary residence buyers.
“This suggests that second-home buyers tend to be a step ahead of general
buyers in sensing a market recovery,” Yun said.
The typical vacation-home buyer was 47 years old, had a median
household income of $92,100 and purchased a property that was a median distance
of 435 miles from their primary residence; 34 percent of vacation homes were
within 100 miles and 46 percent were more than 500 miles. Buyers plan to
own their recreational property for a median of 10 years.
Lifestyle factors remain the primary motivation for
vacation-home buyers, while rental income is the main factor in investment
purchases.
Buyers listed many reasons buyers for purchasing a vacation
home: 80 percent want to use the property for vacations or as a family
retreat, 27 percent plan to use it as a primary residence in the future, 23
percent plan to rent to others and 23 percent wanted to diversify their
investments or saw a good investment opportunity.
Fifty-five percent of investment buyers said they purchased for
rental income, 30 percent wanted to diversify their investments or saw a good
investment opportunity, and 20 percent wanted to use the home for vacations or
as a family retreat.
Eleven percent of vacation buyers and 16 percent of investment
buyers purchased the property for a family member, friend or relative to use,
often for a son or daughter to use while attending school.
Forty-five percent of vacation homes purchased last year were in
the South, 25 percent in the West, 17 percent in the Northeast and 12 percent
in the Midwest.
Thirty-six percent of investment properties purchased last in
the South, 28 percent in the West, 20 percent in the Northeast and 16 percent
in the Midwest.
Forty-seven percent of investment buyers said they were likely
to purchase another investment property within two years, as did 37 percent of
vacation-home buyers. Twenty-nine percent of vacation buyers said they
were likely to purchase another vacation home within two years, as did 31
percent of investment buyers.
Approximately 42.8 million people in the U.S. are ages 50-59 – a
group that dominated second-home sales in the middle part of the past decade
and established records. An additional 43.1 million people are 40-49
years old, which is the prime age for current buyers, while another 40.1
million are 30-39.
NAR’s analysis of U.S. Census Bureau data shows there are 7.9
million vacation homes and 43.7 million investment units in the U.S., compared
with 75.2 million owner-occupied homes.
NAR’s 2013
Investment and Vacation Home Buyers Survey, conducted in March
2013, includes answers from 2,326 usable responses about homes purchased during
2012. The survey controlled for age and income, based on information from
the larger 2012 NAR Profile of Home Buyers and Sellers, to
limit any biases in the characteristics of respondents.
The 2013
Investment and Vacation Home Buyers Survey can be ordered by
calling 800-874-6500, or online at www.realtor.org/prodser.nsf/Research.
The report is free to NAR members and costs $149.95 for non-members.
The
National Association of Realtors®, “The
Voice for Real Estate,” is America’s largest trade association, representing 1
million members involved in all aspects of the residential and commercial real
estate industries. For additional commentary and consumer information,
visitwww.houselogic.com and http://retradio.com.
*Vacation
homes are recreational property purchased primarily for the buyer’s (or their
family’s) personal use, while investment homes are residential property
purchased primarily to rent to others, or to hold for other financial or
investment purposes.
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