Jun. 17, 2007 07:30 PM NEW YORK – For years, the wealthy have bought second homes to use as vacation retreats and benefit from the appreciation of the property. Increasingly, middle class families are looking more seriously at the second home market – especially baby boomers who want to line up a home now for retirement later.
“The demand for second homes is big and growing,” said Joseph H. Badal, president and chief executive of Thornburg Mortgage in Santa Fe. “Baby boomers are feeding the second-home buying now, and young families are also in the market.”
But buying a second home requires a major financial commitment, so consumers need to think carefully before taking the plunge.
“Many people discover too late that the cost of a second home outweighs the benefits,” Badal said. “There’s the mortgage, insurance, taxes … and maybe they don’t use it as much as they thought. It really requires planning.”
Although rising interest rates have been slowing home-buying in general, the market for second homes has remained strong, according to figures from the National Association of Realtors.
As sales of primary residences and investment homes dropped last year, sales of vacation homes rose nearly 5 percent to a record 1.07 million from 1.02 million in 2005, the Washington, D.C.-based trade group said.
The Realtors said the typical vacation home buyer was 44 years old, came from a household with a median annual income of $102,000 and purchased a property that was about 215 miles from his or her primary residence.