Reuters reported today that according to the National Association of Realtors, Sales of vacation and investment homes in the United States slipped to 30% of all transactions of existing and new homes in 2008, the  said on Monday.

However, more than four out of 10 investment buyers and more than three in 10 vacation-home buyers paid cash for their properties, with large percentages indicating that portfolio diversification was a factor in their purchase decision, the NAR said in a report.

The market share of homes purchased for investment was 21% last year, unchanged from 2007, while another 9% were vacation homes, compared with a 12% market share in 2007, the NAR said. The total share of second homes declined from 33% of all transactions in 2007, while in 2005, the peak year for home speculation, 40% of sales were second homes, the NAR said. 

While our market on Kauai tends to be a bit unqiue and non-conforming to mainland trends, these numbers are fairly close to the market. However, in the higher price ranges, the percentage of all cash buyers appears to be much higher than the national averages listed above. It's certainly plausible that with interest rates in the 4's for 2nd home owners, we may see an increase of mortgage-based purchases of second homes this year.