Second Home Blues

Posted by: Toddi Gutner on April 11, 2006

It is no surprise that vacation and investment homes sales both set records in 2005, according to the recently-released the National Association of Realtors’ annual report. Four out of 10 residential transactions last year were for second home sales. That translates to 28% of all homes bought were for investment, and 12% were for vacation homes.

I can’t help but hope that those buyers who helped to set this new record had planned to hang on to these properties for a while and not rely on their real estate appreciation for investment income.

Reader Comments

AG

April 12, 2006 9:15 PM

Hey,

I agree with your comment 100% . I have a second Home and Investment Property in Central FL. I get offers that tells me to take the money and run. However, I stay to my guns and say, my homes are doing well and I'm in it for the long haul!

I have a plan and I have to see it out; live in one that's paid for, and rent the other paid out one to provide me with sure income when I'm in retirement mode!

stever

April 13, 2006 12:12 PM

hahahahahahahahahahahahahahahahaahahhahah

Nubricks

April 13, 2006 12:33 PM

So many investors across the world have already realised that quick flipping of real estate is not actually as easy as everyone makes out. Spain's property market in particular has slowed dramically as supply is far greater than demand and many investors are now selling at a loss, buyers beware!

Randall Wilson

April 19, 2006 5:03 PM

The problem with the analysis is that many purchased second homes with the intention of using them as a primary investment vehicle. As an extension, a small population essentially leveraged all of their retirement assets and essentially "flipped" their retirement fund into their second home with the belief that prices and values will rise continueously. For those that were willing to shoulder this type of risk, the next couple of years are sure to lead to some sleepless nights.

-Randy

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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