Second Home Sales Decline - Massachusetts Blog

By
Real Estate Agent with The Buyers' Counsel

HousesAlthough the sales of single family homes in Massachusetts have picked up recently, one category of the market continues to suffer - vacation homes and investment properties. 

Sales of vacation and investment homes plunged to 30 percent of all transactions in 2008 according the National Association of Realtors this week. 

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. 

Tighter lending standards and a struggling economy are factors that are being blamed. It is not unexpected that vacation home sales would decline given the impact of the current financial environment.  A large share of the investment home sales that have taken place are the result of foreclosures or the deep discounts that have been caused by the foreclosure market and increased inventory of homes. 

The current concern that many people have about their own potential job loss has also been feeding into the lack of second home sales.  

For those who do have the desire and the fortitude to pursue a vacation home purchase, this may be the time to do so.  The median price of vacation homes fell 23 percent in 2008, to $150,000 and this part of the real estate market is expected to be lagging for at least another couple of years. 

Even with this economy, the size of the second-home market is still significant.  According to NAR, there are 8.1 million vacation homes in the United States, compared with 75.5 million owner-occupied homes.

Copyright 2009 - Claudette Millette, President, TheBuyersCounsel -  800-392-1446, E-mail    

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Rainmaker
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George Bennett
Inactive - Port Orford, OR
Inactive Principal Broker, GRI

Claudette - Have you seen any reports about the lender's risk assessment of loans on second homes. It is my understanding that the owners of vacation or second homes have bankruptcy protection on the second homes and they can negotiate reductions in interest rate and principle. It would seem that lenders would assess their risk to be significantly greater and thus require higher downpayments and higher interest rates.

Apr 05, 2009 05:52 PM #1
Rainmaker
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Claudette Millette
The Buyers' Counsel - Ashland, MA
Buyer, Broker - Metrowest Mass

George - I have no special knowledge about that but I would be interested if any one else does.  Perhaps a lender will respond to us.

Apr 11, 2009 05:27 AM #2
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Rainmaker
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Claudette Millette

Buyer, Broker - Metrowest Mass
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