More buying their first, second home

The fabled debate of whether a glass is half-full or half-empty has been solved as far as housing in the last few years. Favorable conditions have allowed many American households to purchase their first home … and their second home.

The increasing value of the homes they have purchased has allowed strong appreciation rates, which, along with available mortgage financing, provides an incentive to buy another home. Really.

The very same market fundamentals of low interest rates, good financing rates and increasing household income has allowed those who wish to do so to buy one or more available properties as vacation homes or for investment properties.

You could call this period the second-home market. These buyers of second homes tend to be somewhat older with a higher household income than the typical buyer of a home to live in.

The National Association of REALTORS® has been checking on what is really happening. They have found that many of these buyers are baby-boomers. Members of the baby-boom generation, born between 1946 and 1964, are in their peak earning years and many have the financial resources to purchase vacation homes or investment property.

They found the typical vacation-home buyer is 55 years old with a household income of $71,000. Investment-property buyers had a median age of 47 with a household income of $85,700. The typical buyer of a primary residence was 39 years old and had an household income of $66,700.

The majority of second-home buyers — 82 percent of vacation-home buyers and 70 percent of investment property buyers — are married and most have no children under 18 living at home.

If one decides to purchase a second home there has to be a reason. According to the survey, there are many reasons. Some want a place near their favorite vacation destination, while others have purchased property as a source of rental income.

•Thirty-six percent of investment buyers purchased a second home to diversify their investment portfolio while 37 percent sought rental income.

•Twenty-nine percent of vacation-home buyers purchased a property as a family retreat and 27 percent said it would be their residence after retirement.

•Ninety-two percent of second-home buyers viewed their purchase as a good financial investment.

Just as second homes are purchased for different reasons, the characteristics of the home also vary. Investment properties tend to be smaller and less expensive than vacation homes. Also, they found vacation homes are more often located in a resort community than are investment properties.

During acquisition of a second home, most buyers rely on a real estate agent to provide information about homes for sale and assist in the home search. Although a larger share of these second-home buyers than primary residence buyers purchase a home directly from the previous owner, a majority still purchase their home through a real estate agent.

Over 80 percent of second-home buyers used a real estate agent in their home search and 62 percent purchased their home through a real estate professional.