More boomers investing in 2nd homes
Real estate now viewed as less risky than stocks or bonds, group says
10:48 PM CST on Tuesday, March 1, 2005
By STEVE BROWN / The Dallas Morning News
More than a third of U.S. home sales last year were vacation homes or
investment properties.
Declines in the stock market and baby boom buyers are fueling the
second-home trend, according to a report released Tuesday by the National
Association of Realtors.
"It's clear from my perspective that second-home buying really picked up
after 9-11," said David Lereah, the Realtors' chief economist. "Real estate
is viewed as a solid investment -- less risky than stocks, bonds and other
assets right now."
Buyers purchased a record 2.82 million second homes in 2004 -- up 16.3
percent. Total home sales rose about 10 percent.
Vacation-home sales jumped almost 20 percent in 2004, according to the
Realtors' study.
The median price of vacation homes was $190,000 last year, slightly higher
than the overall median home price. More than 80 percent of the vacation
properties were single-family homes, with a median size of about 1,300
square feet.
The Realtors' survey found that the average vacation-home buyer is 55 years
old and earns about $71,000.
Most vacation homes are within 49 miles of the buyer's primary residence.
And about 20 percent of second-home buyers plan to retire to the property.
Investment-home buyers tend to make their purchases even closer to home --
within 18 miles of their primary residences, Mr. Lereah said. The median
purchase price was about $148,000.
Investment-home buyers say they are making the purchases to diversify their
assets from traditional holdings such as stocks and bonds.
"This is now the most frequently cited motivation for purchasing a second
home," Realtors president Al Mansell said.
While investment-home prices have risen by more than a quarter since 2001,
Mr. Lereah worries about some buyers who are jumping on the real estate
bandwagon.
"An investment home is not for everyone," he said. "Some of these
interest-only loans are swaying some people" into buying, he said, and the
investments may not always be solid.
