Second Place – Who is the Second-Home Buyer? – Part III

A national and local look at how the vacation- and second-home market is faring. By Gayle Bennett – Reprinted from The Real Estate Specialist

According to the NAR second-home survey, 33 percent of vacation homebuyers plan to use their property for vacations or retreats, 19 percent plan to convert their vacation home into their primary residence in the future, 13 percent bought for potential price appreciation and 13 percent purchased because they found a good deal.

Most of the Solis’ buyers fall into the first two categories, although there can be some overlap. “Our largest feeder market is the Bay Area,” Sandy Soli says. “They can get in and out of the car and come here multiple times a year. Given that we are a tax-friendly state, we also attract second-home buyers from other tax-friendly states like Florida and Texas.”

Polly says there are two typical buyers in his second-home market. “We have buyers who have generational wealth in that baby boomer generation who aren’t looking to spend any more winters in the Midwest or the North. The other buyer is the one who is nearing retirement and wants to purchase now. They will use the property first as an income property to help offset the cost of ownership, carving out a few weeks for personal use as a vacation property. Florida doesn’t have a state income tax, and that’s a nice 6 to 8 percent savings for people.”

He says that 68 percent of sales $500,000 and over are cash sales. “This market has predominantly been a cash market, so this is normal.”

People come to Northeastern Michigan to escape the tri-county (Detroit) area, Pearson says. Their decision to buy is likely based on what they like to do in the country or on a lake: hunt, fish, boat, kayak or some other activity. “It’s always about dissecting their lifestyle,” she says.

Second Helpings

Among all homebuyers in 2014, the number of buyers purchasing a primary residence declined, but the market share of buyers of vacation homes continued to rise.

2014 2013
Number of sales 1.13 million 717,000
Share of all transactions 21% 13%
Median price $150,000 $168,700
Cash sales 30% 38%
Distressed property sales 45% 42%
Median buyer income $94,380 $85,600
Median distance from primary residence 200 miles 180 miles