The National Association of Realtors lumps investment homes and vacation homes together into one category called second homes.  The latest report shows that second home sales in 2006 were only 36% of all residential sales compared to 40% of all sales in 2005.  However, when the category is broken down, one can see that all the loss was in the "investment home" category, as speculators left the market, and the "vacation home" segment was actually up by 4.7% to set a new record of 1.7 million transactions, or 14% of all homes purchased. 

I wrote an article last week for my newsletter that will be sent out in a couple of weeks.  I speculated on the reason that our sales were still strong, while other primary markets are not. The baby boomers are our main clients, and I think that they are insulated from the vagaries of the economy as they have more savings and are not spending as much money as people with young families.  They have made money in real estate for the last thirty years and are very comfortable with real estate purchases.  It turns out that the average age of the vacation home buyer has dropped from 52 in 2005 to 47 in 2006.  My personal experience has been that more younger people are buying vacation homes, but are looking at them as an investment vehicle that they can enjoy using.  Older second homes buyers see them as a place to bring their families back together as the kids grow up, move away, and have their own kids.  The older Buyer spends more money and can afford $500,000 or more.  The younger families prefer to stay under $250,000 if they can.