Second-home buyers mean business; Investment, retirement trump vacation as reason to buy
Second-home buyers mean business Investment, retirement trump vacation as reason to buy By Anfrea Coombes, MarketWatch Last Update: 12:31 PM ET Feb. 18, 2005  SAN FRANCISCO (MarketWatch) -- More Americans are seeking second homes as a hedge against the stock market, and as a key part of their retirement plan. Eighty-two percent of homeowners said they're planning to buy a second home, a 13 percent rise from a year earlier, according to a survey of 363 visitors to EscapeHomes.com, an online marketplace for second homes. "This is the fastest growing subset of the residential real estate market," said David Hehman, president of EscapeHomes.com. Given that this is a poll of EscapeHomes.com visitors, the results are skewed towards people already interested in buying a second home, but the jump in prospective buyers is still significant, Hehman said. "This is a select subset ... so you have to be careful, but you can see we're capturing a part of the bigger trend," Hehman said. "It's a proxy for what's happening in the larger market." Overall, the second-home market is growing: About 445,000 second homes were purchased in 2003, a 24 percent rise over 2001, according to the National Association of Realtors. Nationwide, there were about 6.6 million second homes in 2003, according to NAR. Forget the fun For more buyers, a second home is not about enjoying a fun vacation spot but about making a smart money move. Twenty-nine percent of those planning a purchase said they were seeking a second home as an investment, and 26 percent said the purchase would be their retirement home. Just 18 percent expressed interest in finding a vacation home. A year earlier, second-home seekers were more evenly split: 25 percent sought a second home as an investment, 25 percent wanted one for retirement and 24 percent sought a vacation home. The specter of rising interest rates might prompt more homebuyers to purchase a second home more quickly. Among those surveyed, 41 percent said they'll buy a second home within the next two years, up from just 24 percent who aimed to stick to that timeline in 2003. Near or far, it matters not More than one-third of those surveyed said they were willing to board an airplane to reach their second home, up from about 25 percent in 2003. And 60 percent of the homeowners said they plan to buy a second home more than 500 miles away from their current home. That trend is likely spurred by the Internet playing a bigger role in buyers' second-home research, making multiple trips to visit a prospective purchase less necessary, and making it easier to purchase from afar. Only 29 percent of the homeowners visited their desired second-home location two or three times, down from 40 percent who had done so in 2003. "With agents and sellers understanding the importance of posting virtual tours and photos and really detailed information online, it allows people to do much more research at home beforehand," said Amanda Sturges, a spokeswoman for EscapeHomes.com. That's particularly true for those seeking investment properties, she said. "If you're buying for investment purposes only, you can get a lot of good data online now. You can really find out what rental rates are, what occupancy rates are, and get a lot of information about what's available in the community," Sturges said. Andrea Coombes is a reporter for MarketWatch in San Francisco.