The Second Homes Market in 2008.
The purchase of a vacation home or a residential investment property is influenced by many factors that are often different than the motivations for the purchase of a primary residence. Especially
during a period of weak home sales and considerable uncertainty about the economy, it is important to gauge how the economic environment is affecting each segment.
To assess the state of the vacation and investment buyers market in 2008, NAR Research recently released its latest survey of home buyers specifically addressing the motivations of second-home buyers and characteristics of the vacation and investment property market.*
Primary Residence Buyers
In 2008, 70 percent of home buyers indicated that they purchased a home to use as their primary residence, an increase from 67 percent in 2007 and up significantly from 60 percent in 2005. Most often, buyers purchase a primary residence based on job relocation needs, formation of new households or changes in family circumstances necessitating a larger or smaller home or a home in a different location. These factors are present – perhaps to a larger or smaller degree – whether the economy is expanding or contracting. Consequently, sales of primary residences fell by 13.2 percent, somewhat less than the 16 percent decline in the combined sales of existing and new homes, overall.
Vacation Home Buyers
For the remaining 30 percent of home buyers, the motivation to purchase an investment property or vacation home is influenced by a variety of factors. In an environment of economic uncertainty, discretionary purchases such as vacation homes can be more easily delayed than the purchase of a primary residence as evident from the decline in the share of vacation home purchases to 9 percent in 2008 from 12 percent in 2007.
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