Follow the Footprints
The early boomers who are buying vacation homes now are literally leaving footprints in the sand (beach) and/or dirt and snow (mountains and ski areas). Buy where the boomers are buying and your vacation
home will generate strong wealth gains when you are ready to sell. Where and how can you track their footprints? I am able to identify several trends that the boomers appear to be following:
1. Beach, mountain, and ski resorts.
Boomers are attracted to beach (ocean) resorts, mountain resorts, and ski resorts. These are the three vacation spots in which supply is tight and prices are rising because of steady, strong demand. During the next fifteen years, I expect that an excess demand for these limited-supply vacation resorts will pump up prices to a point where it will become increasingly difficult for many investors to find properties they can afford to purchase. That means you should look for properties in these areas sooner rather than later.
2. Affordable towns with double-digit price appreciation.
Some boomers are attracted to towns that are near (within an hour's driving time) beach, mountain, and ski resorts. These towns are more affordable (right now), but boomer demand is driving prices upward.
3. Close proximity to primary residence.
Some boomers are choosing to purchase vacation homes close to their primary residences. This trend has been observed since the 9/11 terrorist tragedies. A certain percentage of boomers no longer want to travel far away from their primary residence. They want to stay close to their friends and family even in retirement. Rising sensitivity to terrorism has some boomer households desiring to stay near home where they feel comfortable and secure. Boomers also probably make up the majority of households who use their second homes on weekends and holidays throughout the year-if the travel time from primary to secondary home is manageable.
4. Rural/small-town telecommuting homes.
Boomers are the first generation to take full advantage of the great technological innovations of the past several decades, which has led to increased purchases and use of vacation homes. Boomers who are not yet retiring are purchasing vacation homes earlier in their lives when their job creates an opportunity for telecommuting. These households are attracted to vacation homes in small towns and/or rural areas where they can telecommute to their jobs. Some of these boomers are "consultants" and need just a laptop computer, a cell phone, and voice mail. Others work for companies that permit telecommuting and provide them with the necessary technology to make it happen. As long as they are close to some mode of transportation-airports, trains, or highways-- that enables them to reach the office fairly quickly when necessary, they find telecommuting workable. These footprints are more difficult to identify, since they are scattered outside of most major metropolitan areas of the nation. But there will be more and more boomers who will take the telecommuting plunge, driving up vacation property values, so you need to stay ahead of this crowd.