May 20, 2009

Vacation Homes...luxury or investment?

Posted to Geneva Lake Area , Julie Sarton

As bad as the market has been the last several years, I’ve been pleasantly surprised and heartened by how many buyers have still been pursuing vacation homes in our area. Our second home market has always been strong since we’re a resort area, nonetheless we all feared that in a tight economy the ‘luxury’ of a vacation home would be one of the first things to go. Although there has been some decline in the number of vacation home sales, that market remains viable and strong in our area…..and the reasons are sound and logical.

The National Association of Realtors (NAR) conducted a 2009 Investment and Vacation Home Buyers Survey, which concluded that 1) now is the time to buy a second vacation home, 2) that this market is fundamentally healthy, and 3) that the long-term demand for these homes is favorable. How can this be? First, as we all know, home prices are down drastically. A few years ago before prices escalated rapidly, buyers who missed buying low were sorry later; in 2012 or more, buyers may see 2009 as another missed opportunity. The NAR survey revealed that the average vacation home price is down at least 23% from the median price in 2007. Couple that with rock- bottom , record low interest rates, and the affordability index sky rockets. Second, even though ‘flipping’ homes is dead, more and more buyers are once again seeing real estate as a sound long term investment; it’s a no-brainer that by buying at the bottom of the market your investment will appreciate over time. Third, the survey revealed that there is an increase in buyers who are renting their second homes for an additional income stream and are more realistic in their rental expectations. The internet not only gives owners a good venue to post their rentals, but can offer lots of information and guides to managing rental properties. And last, the Baby Boomers, along with two even larger population groups right behind them, will keep the demand up for the next 10 years at least.

Luxury or investment? How about both; enjoy a serene, relaxing get-away, and rent it out when you’re not using it. I did this with a home in Door County, Wisconsin, for 14 years and my rentals paid for all the expenses of taxes, R&M, utilities, etc. Even if you don’t rent your vacation home, buying low right now and watching it appreciate still qualifies as a good investment, and the luxury is undeniable. We have an ample inventory of gorgeous vacation homes with access to beautiful lakes and year-round recreational activities. I can help.

Posted by:Julie Sarton

Leave a Comment