For sellers, 2006 was a difficult year for real estate. The National Association of Realtors(R) (NAR) reported that sales will be down in 2006 about 9 percent from 2005, a record setting year.
One bright spot in the market is the vacation home segment. NAR’s annual Investment and Vacation Home Buyers Survey shows vacation-home sales rose 4.7 percent to a record 1.07 million in 2006 from 1.02 million in 2005.
Investment-home sales did not fare as well. This segment fell sharply, down 28.9 percent to 1.65 million in 2006 from a record 2.32 million in 2005. Primary residence sales also fell 4.1 percent to 4.82 million in 2006 from 5.02 million in 2005.
By learning some of the characteristics of the typical vacation-home buyer, Realtors may be able to customize marketing to capitalize on this growing market. According to the survey, the typical vacation-home buyer in 2006 was 44 years old, had a median household income of $102,200, and purchased a property that was a median of 215 miles from their primary residence; 42 percent of vacation homes were closer than 100 miles and 32 percent were 500 miles or further.
In terms of location, 29 percent of vacation homes were purchased in rural areas, 24 percent in resorts, 22 percent in a suburb and 10 percent in an urban area or central city. Sixty-seven percent were detached single-family homes, 21 percent condos, 8 percent townhouses or rowhouses, and 4 percent other.
While the outlook for 2007 is better, pending home sales, a forward-looking indicator, show sales closed in April are likely to remain soft, with some drag possible in May as well, according to the National Association of Realtors®. The possibility of desperate sellers who have seen their listings linger for months in 2006 should be driving buyers back to market. But, these buyers are able to be choosy, with developers and even individual sellers offering a host of incentives such as cash at closing and free homeowners association fees. In markets where income is not keeping pace with housing costs, sellers will have to price their properties strategically.
According to Mark Nash of http://www.1001realestatetips.com/forrealestateagents.html, “Inventory levels will remain in the six to seven moth range. Listing leftover's from 2006, will roll into 2007. The leftovers are either un-realistic sellers whose pricing is from the "froth years" or thier homes haven't been updated to keep up with the stiff competition and time-starved buyers.”
Mortgage rates are expected to remain in the 5.5% to 7% range, while foreclosures due to investors who took advantage of risky financing options will rise. Markets that were “hot” such as Florida, Arizona, California and Washington D.C., will likely be unstable, ranging from the extremes of overpriced properties to high amounts of foreclosures, until a middle ground is reached. Low mortgage rates and plentiful foreclosures may drive opportunities for increasing vacation home sales.
The NAR reports that ten states enjoyed solid sales gains in the second quarter of 2006 versus 2005. These included Alaska, Arkansas, Texas, North and South Carolina, Vermont, Tennessee, New Mexico, Georgia, and Wyoming. These states show a trend away from typically urban markets and may have benefited from the rise in vacation home sales. |
