Vacation Homes

Sales Of Vacation Properties Rise
By: Joe Register, The Bulletin
06/15/2007

Vacation home sales and investment home sales together accounted for 36 percent of all new and residential transactions. With these results, is it really a good time to buy a vacation or investment property?

In 2006, more than one million people bought vacation homes. These million home sales represent an increase of 4.7 percent over the preceding year. This according to the National Association of Realtors (NAR), industry experts who say that this data from NAR is good news for people who want to buy a vacation home.

According to Christine Karpinski, author of How to Rent Vacation Properties by Owner, 2nd Ed: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment (Kinney Pollack Press, 2007), vacation home sales and investment home sales together accounted for 36 percent of all new and residential transactions. With these results, is it really a good time to buy a vacation or investment property?
The general public tends to view the real estate market as a whole. But Karpinski points out that that there are different segments to the real estate market, and not all of the segments respond in the same manner or at the same time.

Residential sales, i.e. a house bought as a primary residence and investment purchases are two separate and distinct markets. So don't let the gloom-and-doom-sayers discourage you, and don't let the sluggish real estate market in your area do so either. You are on a whole different playing field, says Karpinski.

While vacation home sales are up, investment home sales are down by nearly 30 percent since 2005. This can be good news for vacation homebuyers because fewer speculators in the market means less demand and, as we have discussed in this column before, lower demand equals a drop in prices. If you are buying a vacation home for your personal use, not having to compete with speculators will allow you to take your time and make a thoughtful purchase that you can feel good about.

You don't have to be wealthy to purchase a vacation home. Karpinski points out that even if you cannot comfortably afford two mortgages, it is not difficult to offset the cost of the mortgage. She adds that you can rent it out part of the time and enjoy it at others. She notes in her book that if you rent out your home for only 17 weeks out of the year, you can still break even.

You may feel at the time that you purchase a vacation home that you do not want to rent it out. Even so, it is wise to make sure that such an option is available to you, should you ever in the future wish to do so. Having that safety net of being able to rent out your vacation home could prove beneficial in the future. Be sure to check to see if the homeowners association or municipality has, as many do, prohibitions against short-term rentals. Buying in an area that does not permit short-term rentals could eliminate the possibility of a safety net and could negatively affect your resale value.

Vacation homes that can be rented typically hold their value better because more people are able and willing to buy such a house.

Joe Register is a Realtor practicing in the Delaware Valley. E-Mail your questions to 4sucasa@comcast.net.or call 215-657-8100.

©The Evening Bulletin 2007