Investment & Vacation Home Markets Waking Up!

The investment- and vacation-home markets have been among the first to show signs of real estate resurgence, according to the people who keep track of such things (as usual, the National Association of Realtors® is one). It might seem unlikely, given the general view that the housing sector continues to post mixed signs of recovery. But when you think about it, there are reasons why it could make perfect sense. A few that come to mind: 

* The price is right. If the overall real estate market is in fact in the process of rebounding, it’s still so early that no one can be certain it will be strong -- or even that it will continue. You couldn’t describe a more appealing situation for small investors who have been biding their time, waiting for the right bargain to pounce upon. Investment home prices rose 6.4% last year (of course, because rents were rising), yet the median vacation-home price was down over 19%! Talk about vacation bargains! All of a sudden, the daydream of affordable beach houses for sale seems to have become a reality. 

* The market is open. Right now, there are also strong inventories of vacation and beach houses for sale – many of them located in attractive settings. Many of those settings also happen to be the very places were the real estate market is still digging out from under the foreclosure mess. This makes it easy for people to find vacation- or investment-home opportunities that previously would have been out of their price range.  

* Interest rates are low. Low interest rates make a second mortgage even more affordable for those seeking a luxury vacation home.  Today's interest rates signal savings throughout the term of the loan, which is even more appealing for those seeking a second home. Combined with the sheer volume of beach houses for sale, this makes it the ideal time to purchase a dream vacation or retirement home.

*Optimism on the rise. When the wolf is at the door, few of us are tempted to make luxury purchases. And for years, it seemed like the only news about the economy was bad. But declining unemployment numbers, soaring stock markets, and the resulting good news for retirement accounts can change attitudes…the same attitudes that underlie investment decisions of every kind.  

A second home can be a vehicle to generate investment income. Or it might be the fulfillment of a long-held dream. For those fortunate enough to have put aside some disposable cash, today any one of those mountain or beach houses for sale could wind up representing both!