Now's a good time to buy a vacation home, but it’s no longer possible to buy and flip a house in order to pocket a quick profit, CNBC’s Diana Olick reports.
The National Association of Realtors reported Monday that sales of U.S. vacation homes rose to a record high in 2006, but sales of investment properties plunged.
Vacation home sales rose 4.7% to 1.07 million in 2006 from 1.02 million in 2005. But sales of investment houses fell 28.9% to 1.65 million in 2006 from a record 2.32 million in 2005. Sales of primary residences fell 4.1% to 4.82 million in 2006 from 5.02 million in 2005.
“We expected the drop in investment sales because speculators left the market in 2006, which caused investment sales to fall much faster than the primary market," David Lereah, NAR’s chief economist said in the report. "But the rise in vacation-home sales is based on strong demographic and lifestyle."
The National Association of Realtors said the combined total of vacation and investment home sales accounted for 36% of all existing and new residential transactions, down from 40% in 2005.
Olick said the typical vacation home buyer is 44 years old and has a median income of $102,200. The vacation home is about 215 miles from the owner’s primary residence. Investors are about five years younger.
“Demographics favor vacation home buyers,” Olick said.
The median price of a vacation home in 2006 was $200,000, down 2% from 2005. The typical investment property cost $150,000, down 18.3% from 2005.
“Investors are shifting away from pricier markets like Florida, Nevada and Arizona,” Olick said. “They’re moving into less expensive markets like New Mexico, Idaho and the Carolinas.”