5.29.2007

Younger Buyers Purchasing Retirement Homes

Buying Trends

Retirement-home sales are growing...among buyers still decades away from retiring. From New York's Catskill Mountains to Oregon's rocky coast, younger couples who might otherwise be focused on building a nest egg instead are buying a lakefront house or country cabin that they hope to one day use in retirement.
For these younger buyers, this isn't an extension of the real estate investment bug that bit a few years ago and is now fading as home prices flag in many markets. And they're not throwing financial caution to the wind just because they want a second home. Instead, they're crunching the numbers and making hard decisions about their personal finances. In some cases, they're receiving an inheritance or a stock grant and are choosing to invest in their future real estate needs rather than the stock market. In other cases, they're altering their expectations about how long they'll work and the kind of returns they'll earn on their nest egg in order to pursue an emotional investment.
No one knows how many younger buyers are out snapping up their retirement homes. But real estate agents and financial planners around the country say they're increasingly assisting younger buyers spending $100,000 to $500,000 for a house to call home in retirement. Partially at play is a cultural shift planners say they see among younger savers who aren't content to just accumulate assets to use in retirement. Instead, this younger generation wants to put some of its nest egg to work today as an investment in family. (Jeff Opdyke, The Wall Street Journal Online)

5.01.2007

MORE HOME-BUYING TRENDS


Vacation-Home Sales Rise, Investment Sales Drop

Second-home sales were mixed in 2006, with the combined total of vacation- and investment-home sales accounting for 36 percent of all existing and new residential transactions - down from 40 percent of sales in 2005, according to the National Association of REALTORS.
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, while investment-home sales fell sharply, down 28.9 percent to 1.65 million in 2006 from a record 2.32 million in 2005. By contrast, primary residence sales fell 4.1 percent to 4.82 million in 2006 from 5.02 million in 2005.
Twenty-two percent of all homes purchased last year were for investment, down from a 28 percent market share in 2005, while another 14 percent were vacation homes, up from a 12 percent share in 2005.
The report pegged typical vacation-home buyers as 44 years old, with median household incomes of $102,200. About 42 percent purchased vacation properties closer than 100 miles from their primary residence and 32 percent were 500 miles or more away. Some 79 percent said the primary reason for their vacation-home purchase was to use the home for vacations or as a family retreat. Other factors that influenced the buy include: 34 percent to diversify investments, 28 percent to use as a future home, 25 percent for the tax benefits, 22 percent for use by a family member or friend, 21 percent because they had extra money to spend and 18 percent to rent to others.
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, eight percent townhouses or rowhouses and four percent other.

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