Second home buyers are coming back into the market, but apparently they prefer relaxation over investment.  The National Association of Realtors® is reporting the vacation-home sales increased even more than the sale of primary residences in 2009 with the former up 7.9 percent while the later rose 7.1 percent.  During the same period the sale of investment properties fell 15.9 percent.   

NAR's 2010 Investment and Vacation Home Buyers Survey shows a total of 553,000 sales of vacation homes in 2009 compared to 513,000 in 2008.  However, the sales of investment homes plummeted from 1.12 million to 940,000.  The sales of primary homes were up to 4.04 million from 3.77 million in 2008.

According to NAR Chief Economist Lawrence Yun, "The typical vacation-home buyer is making a lifestyle choice, with nine out of 10 saying they intend to use the property for vacations or as a family retreat.  Investment buyers primarily seek rental income, with six in 10 planning to rent to others, although one in five wants a family member, friend or relative to use the home."

There is some conflation of the numbers as some purchases are intended for multiple uses.  Most vacation home buyers intend that their purchase be for personal use with only one out of four planning to rent out the home.  One in five investment property purchases will be used for vacations or as a family get-away.  Many buyers are purchasing for the future with 26 percent of vacation home buyers and 8 percent of investment buyers intending to eventually use the house as a primary residence.

The median price for a vacation home in 2009 was $169,000, substantially higher than the median of $150,000 recorded a year earlier.  NAR speculates that this might have been the result of increased sales in higher priced areas in Florida and California rather than any national increase in prices.  Ironically it could actually indicate that prices in some more expensive areas had become more attractive over the year because of price decreases.

Investment homes constituted 17 percent of all home sales in 2009 compared to 21 percent in 2008.  Vacation-home purchases went from 9 to 10 percent of the market.

Investment properties sold at a median price of $105,000 last year compared to 108,000 in 2008.  The West was the most active region for investment home purchases and there were reports of a high share of purchases in California that were all-cash, especially in the lower price categories.  Cash sales continue to be a strong factor in both vacation and investment home purchases nationally as well.  Three of ten vacation-home buyers paid cash last year as did half of investment-home buyers.

Three out of four second-home buyers were married couples. The typical vacation-home buyer in 2009 was 46 years old, had a median household income of $87,500, and purchased a property that was a median distance of 348 miles from their primary residence. Investment-home buyers had a median age of 45, earned $87,200, and bought a home that was relatively close to their primary residence - a median distance of 24 miles. Roughly one in four investment buyers purchased more than one property in 2009.

Yun said that prospects for continued sales of second homes are favorable because the nation's demographic profile shows a large number of people who are in the right age bracket for such purchases. "The large number of people who are now in their 30s and 40s will dominate the second-home market in the coming decade with a strong underlying demand, although sales in a given year will vary depending on the economy. Mortgage lending for second homes was extraordinarily tight in 2009 but it is likely to ease a bit in 2010."