Vacation Home Sales Set Records for 2006

According to NAR, vacation home sales rose 4.7 percent to a record 1.07 million.

14 percent of all homes sold were vacation homes, up from 12 percent in 2005. NAR Chief Economist David Lereah states “The rise in vacation home sales is based on strong demographic and lifestyle factors, with only modest interest in renting their properties to others.”

Who Bought Vacation Homes

NAR’s research shows the typical vacation-home buyer in 2006 was 44 years old, had a median household income of $102,200, and purchased a property that was a median of 215 miles from their primary residence.

“The demographics favor vacation home sales because large numbers of consumers are in the prime buying ages, and buyers want recreational property for personal use – investment is a secondary consideration,” Lereah says.

Here are some more findings from the survey:

Buyers get younger. In the 2005 survey, the median age of the vacation-home buyer was 52, eight years older than in 2006. Lereah expects that a larger group of people aged 40 to 49 would continue to drive the market in the coming decade. “We see this happening now with 44.7 million people in their 40s, and the median age of vacation buyers has dropped close to the historical average, which is about 47,” Lereah says.

Family retreats. In listing the reasons for purchasing a vacation home, 79 percent of buyers said they wanted to use the property for vacation or as a family retreat; 34 percent to diversify investments; 28 percent to use as a primary residence in the future; 25 percent for the tax benefits; 22 percent for use by a family member, friend, or relative; 21 percent because they had extra money to spend; and 18 percent to rent to others.

Rural areas most popular. In terms of location, 29 percent of vacation homes were purchased in rural areas, 24 percent in resorts, 22 percent in a suburb, and 10 percent in an urban area or central city. Sixty-seven percent were detached single-family homes, 21 percent condos, 8 percent townhouses or rowhouses, and 4 percent other. One-quarter of vacation homes were purchased in the Northeast, 13 percent in the Midwest, 38 percent in the South, and 25 percent in the West.

Seen as long-term investments. Vacation home buyers plan to keep their property for a median of 10 years and 38 percent, the largest share of respondents, plan to keep their vacation home for 11 years or more.

NAR’s 2006 Investment and Vacation Home Buyers Survey, conducted in April 2007, includes answers from 1,412 respondents, reflecting 1,729 homes purchased in 2006. Of these, 1,106 were primary residences and the remainder were vacation and investment purchases.

SOURCE: NAR Realtor.Com