SOURCE: National Association of Realtors

National Association of Realtors

November 14, 2009 19:59 ET

Realtors® Agree: Challenges and Opportunities Remain in the Second Home Market

SAN DIEGO, CA--(Marketwire - November 14, 2009) - Even with an overall decline in home sales over the past few years, buyers remain interested in second homes and recreational property, according to Realtors® at a second home and resort market open forum here today at the 2009 REALTORS® Conference & Expo.

Resort and Second Home Forum Chair and Realtor® Maggie Tomkiewicz, a broker associate on Cape Cod with Milbury and Company in Cataumet, Mass., said the market has improved recently. "Consumer confidence is coming back and we will eventually return to more normal conditions," she said. "We won't return to boom conditions, and we wouldn't want to -- a balanced market is the healthiest."

According to the 2009 National Association of Realtors® Profile of Home Buyers and Sellers, 2 percent of recent home buyers own one or more vacation homes, 4 percent own two primary residences, and 8 percent own one or more investment properties. Annual data collected by NAR shows that in 2008, vacation homes accounted for 9 percent of all sales while investment homes were 21 percent of transactions; 2009 data will be published next spring. There are 8.1 million vacation homes and 40.5 million investment units in the United States, compared with 75.5 million owner-occupied homes.

Second home specialists who attended the forum expressed widespread concern about appraisal problems, resulting from unintended consequences of the Home Valuation Code of Conduct implemented in May. The increased use of appraisers from outside their area of expertise, who generally don't have access to detailed local market information, often results in low valuations and cancelled sales. "We seem to have lost common sense in the appraisal market," said Ken Libby, a broker from Stowe, Vt.

Forum vice chair Susan Martins-Phipps, an agent with Phipps Realty in Warwick, R.I., suggested agents give appraisers a package of property comparisons and background material to inform appraisers who are working for appraisal management companies. "Unless you arm appraisers with all the information they need, you may not get accurate valuations."

Aside from appraisal concerns, jumbo loans in resort areas also have been a problem, with lenders requiring large downpayments and "over documentation" for well-qualified buyers.

Realtors® attending the forum also shared various local issues and challenges, including laws prohibiting waterfront property development beyond the high water mark; valuation of boat docks; and points of sale enforcement codes that require various homeowner improvements, often related to energy efficiency and environmental impact, upon sale of the home -- the costs of such improvements can often run $10,000 or higher.

Despite these challenges, demographic analysis indicates the long-term demand for second homes looks favorable because there are large numbers of people in the prime years for buying a second home. Annual NAR survey results show the median age of a second home buyer typically is in the range of 45 to 48.

Currently, 39.2 million people in the U.S. are ages 50 to 59 -- a group that dominated sales in the first part of this decade and established records for vacation home sales. An additional 44.8 million people are currently in the primary buying demographic of 40 and 49 years old, and another 40.7 million are 30 to 39; these later groups are expected to dominate the second home market in the coming decade.

Approximately 83,000 NAR members are active in the second home market, and more than 900 have obtained the relatively new Resort & Second-Home Property Specialist designation, with 1,000 expected by the end of the year.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data, charts and surveys also may be found by clicking on Research.

REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.

Contact Information

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    Walter Molony
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