Second Homes Vacation Properties

Maui Condominiums Second Homes Market
Second-home sales accounted for 36 percent of all existing-home and new-home sales in 2006, down from a 40 percent share in 2005, NAR reported. Investment-home sales dropped from a 28 percent share in 2005 to a 22 percent share in 2006, while vacation-home sales rose from a 12 percent share in 2005 to a 14 percent share in 2006. >Maui condominiums for sale have been holding their value. While residential prices have softened Maui Condominiums in Kihei, Wailea, Lahaina and Kapalua have maintained their value.
The survey found that the typical vacation-home buyer in 2006 was 44 years old in its 2005 second-home buyer survey; NAR reported that there were 36 million people ages 50-59 in the United States and the median age of vacation-home buyers was 52.
About 79 percent of buyers of vacation homes who participated in the survey stated that they wanted to use the home for vacation or as a family retreat; 34 percent said it was 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.
Home Away Inc., an online vacation rental company, said in a statement today that the company’s own research shows that many vacation-home buyers “do not initially intend to rent their second home, they choose to do so after a year or so of ownership, discovering they do not use the home as often as intended and it is more expensive than anticipated.”
Also, the company reported that slowing price appreciation or retreating prices are leading buyers of investment properties to rent homes as vacation properties to cover ownership costs until housing prices improve.”
According to NAR’s survey, 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 row houses, 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.
Meanwhile, 46 percent of the surveyed buyers of investment homes stated that they purchased the homes to provide rental income; 43 percent to diversify investments; 23 percent for tax benefits; 18 percent to use for vacations or as a family retreat; 15 percent because they had extra money to spend; 13 percent for use by a family member, friend or relative; and 12 percent to use as a primary residence in the future.
Thirty-seven percent of investment homes are in a suburb, 22 percent a rural area, 18 percent urban or central city, and 7 percent in a resort area. Sixty-three percent are detached single-family homes, 26 percent condos, 6 percent townhouses or row houses, and 5 percent other, the survey found.
Twenty-four percent of investment properties were purchased in the Northeast, 17 percent in the Midwest, 39 percent in the South and 20 percent in the West.
Twenty-five percent of vacation-home buyers paid cash for their property, as did 32 percent of investment buyers. An unusually high number of respondents in this survey report purchasing new homes: 44 percent of vacation-home buyers and 36 percent of investment-home buyers, the association reported.
Vacation-home buyers plan to keep their property for a median of 10 years; 38 percent, the largest share of respondents, plan to keep their vacation home for 11 years or more. Investment buyers plan to hold their property for a median of five years, with 33 percent planning to keep for six years or more. Even with the cautions on speculative investment, 12 percent of investment buyers plan to sell in one year or less, although some may be adding value by renovating.
While the demand for vacation homes tends to follow suit with trends in the primary residential market, that is not the case in the current market environment, said David Hehman, president of Escape Homes, an online marketplace for vacation properties and second homes.
The interest in vacation homes is strong despite a slowdown in the overall real estate market, he said, with high search-activity traffic for vacation homes at the Web site.
Vacation-home buyers typically are interested in purchasing homes near water and in locations with good weather, he said, as well as in rural and remote locations. Florida and Maui Hawaii are among the most popular destinations for second-home buyers he said.
Most sales involve single-family properties, he said, and coastal properties are particularly popular with second-home buyers. “Target properties are really anything close to the beach — there is a lot of interest these days in view properties,” he said.
Also, the local market is not seeing that much interest from speculators and flippers these days, he said. “I don’t think many people are buying to flip in the short-term.”
According to the NAR survey, about 78 percent of vacation-home buyers and 68 percent of investment buyers participating in the survey are married couples. Single men purchased 11 percent of vacation homes and 17 percent of investment property while other household categories are in the single digits.
Sixty percent of vacation-home buyers and 54 percent of investment buyers purchased through a real estate agent or broker, while 20 percent of vacation buyers and 17 percent of investment buyers purchased directly from an owner they knew.
Eight in 10 second-home buyers participating in the survey said they considered it a good time to invest in real estate, compared with 57 percent of primary residence buyers. Fifty-five percent of vacation-home buyers and 66 percent of investment buyers
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Steven Nickens
Nickens Team
Coldwell Banker Island Properties
3750 Wailea Alanui Suite B-35
Wailea Maui, Hawaii 96753
Shops At Wailea
Fax 808-874-8626
www.nickensmaui.com
Cell: 808-280-2208