According to the National Association of Realtors, more than one million people bought vacation homes in 2006. Industry experts say the NAR data is good news for those considering purchasing a vacation home.
"Their data basically [reported] that vacation-home sales rose in 2006 based on a 4.7 percent increase [over the previous year]," says Christine Karpinski author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment (Kinney Pollack Press, 2007, ISBN: 0-9748249-9-2, $26.00) and Director of Owner Community for HomeAway.com.
Despite those results, is now really a good time to buy a vacation property?
"There's a lot of talk about what the real estate market is doing and that this is the third worst time in the real estate market as far as things dropping but we haven't seen a significant drop in the vacation market. As a matter of fact, in a lot of markets it's still going up. Now that doesn't mean that all of them are; some [vacation markets] have gone down a little bit or are normalizing,"
Vacation home sales and investment home sales together accounted for 36 percent of all existing and new residential transactions. Karpinski says, the survey results signal a "definite green light to anyone thinking of buying a vacation property."
Karpinski says it's important for consumers to understand that there are different segments of the real estate market.
"The general public tends to view the real estate market as a whole," says Karpinski. But she says that not all real estate markets perform the same. The residential market is different from the investment, commercial or vacation properties.
"They really are two separate and distinct markets. So don't let the doom-and-gloom sayers discourage you, and don't let a sluggish real estate market in your area do so, either. You're on a whole different playing field," adds Karpinski.
There's more good news for vacation-home shoppers according to Karpinski. She says that investment home sales are down by nearly 30 percent since 2005.
Fewer speculators in a market means less muddying of the water and perhaps less driving up of sales prices. "If you're buying a second home for your personal use, you don't want to compete with speculators. You want to take your time and make a thoughtful purchase you can feel good about," says Karpinski.
If now is a good time to jump into the vacation home sales market, do you have to be wealthy to buy? Karpinski says not at all.
"Even if you can't comfortably afford two mortgages, it's not difficult at all to offset the cost of your vacation home," says Karpinski.
She adds that you can rent it out part-time and enjoy it at other times and "As I point out in my books, if you rent out your home only seventeen weeks out of the year, you can still break even."
An important consideration before buying your vacation home is to make sure that you have the ability to rent it out, even if you think you aren't likely to do this at the time you're buying the property.
"Having that safety net to be able to rent out your home is very important even if you're sort of dead set against anybody renting your home now. The reason is that there are a lot of homeowners associations and municipalities that don't allow short-term rentals," says Karpinski.
So buying in an area that doesn't allow short-term renting will not provide you with a safety net and Karpinski says it could hurt your resale value.
"Vacation homes that can be rented typically hold their value better because you've got that money to help off-set [the cost] and your pool of buyers then opens up," explains Karpinski.
As with any real estate purchase, the best assurance for a good investment is acquiring an education about the area you're buying in, researching restrictions, and hiring qualified industry experts to guide you through the process.
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*Written by Phoebe Chongchua and posted to our Real Estate Update | Copyright © 2007 Realty Times®. All Rights Reserved.
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