Aging Baby Boomers Looking for Vacation Homes : Recreation: About 44% of the 1,000 adults polled nationwide said there was a fairly good chance they would buy leisure-time property within a decade.
As millions of vacationers relax on the beach, hike in the woods or explore distant cities, some are also doing serious sightseeing in the vacation housing markets.
Real estate professionals report a healthy interest in vacation homes this summer despite a run-up in interest rates, and many predict steady growth in sales over the next several years.
“What’s balancing it out for our industry is that the demographics are so good,” said Tom Franks, president of the American Resort & Residential Development Assn. “Right now, you’re getting the aging baby boomers who are entering into the prime buying age for vacation homes.
“Their economic success in life is pretty well determined by now. . . . They’re ready to look.”
A recent survey by the Washington-based trade group found a rising number of households seriously considering such purchases in the near future.
About 44% of the 1,000 adults polled nationwide last year said there was a fairly good chance they’d buy recreational property within the next 10 years. In a similar 1990 survey, only 26% had such plans.
Most of the would-be buyers were in the 30- to 40-something age group with household incomes of at least $50,000 a year, according to the poll. About half believed they would be spending between $25,000 and $100,000.
The most desired properties: a two-bedroom unit on the beach, with a home on the lake a close second.
With vacation homes, location is key in determining price, perhaps more so than with primary-home property. A small campground site (yes, they do sell them) might go for a few thousand dollars, while an oceanfront house can go for millions.
“Everyone would like to overlook the water,” said Sandy Walter, a real estate agent for Coldwell Banker & Co., at Hilton Head Island, S.C., adding, though that “there’s a tremendous difference in price between a unit overlooking the water and one with a view of the parking lot or trees.”
Walter noted that a two-bedroom condo on Hilton Head facing the beach might sell for $200,000, while the same unit across the hall, sans view, might go for $120,000. A two-bedroom unit a few blocks away from the beach would probably fetch well under $100,000.
While good deals can be found just about anywhere for those who look hard enough, bargains are more prevalent in areas hardest hit by the recession or where overbuilding exists.
Parts of California and the Northeast, for instance, are still recovering from a sharp drop in housing prices.
California realtor Richard J. Rosenthal, who runs Rosenthal & Associates, which has offices in Venice Beach and Palm Desert, says newer homes in resort areas are maintaining their value, but some of the older ones, particularly condo units, are selling for about 25% less than they did in the heyday of the ‘80s.
Many investors eagerly snapped up condos in the past decade, only to dump them later when changes in the tax laws eliminated most of the tax incentives on second homes. Still others have had to let their vacation property go because of hard economic times.
Rosenthal has seen the effects of the housing slump firsthand. In 1985, he paid $120,000 for a two-bedroom Palm Desert home. This year, he saw a three-bedroom unit in the same resort complex sell for $112,000.
“There are good opportunities for people to buy well with good financing. As an owner you have a problem,” he said.
Most financial advisers caution individuals against buying a second home with the idea of making money either in the resale or from rental income.
“Buy it purely for pleasure,” advised Jonathan Pond, author of “The New Century Family Money Book.”
“The ultimate naivete is to buy property thinking you’ll get enough rent to carry you through.”
Experts agree that prospective buyers should consider more than just price when looking for a second home. For one thing, buyers should stick with property that can be reached within a day’s drive. They should track local economic trends as well.
While a steady rise in interest rates has had some effect on the market for primary homes, several realtors and developers say that has not been the case for vacation homes.
“I don’t think our buying public is as closely connected to increases in interest rates as the first-home buyers,” said Jim Perry, a real estate broker and owner of Jim Perry and Co. in Kitty Hawk, N.C. “Second homes are a luxury. You don’t have to have them. Most people who buy them use their discretionary income.”
John Tuccillo, chief economist for the National Assn. of Realtors, agreed: “A good economy will overcome slightly higher interest rates.”
The Federal Reserve had been pushing rates higher since the start of the year to help control inflation. Mortgage rates are now about 1.5 percentage points higher than last summer, averaging between 8.5% and 8.75%. Tuccillo predicts that rates will hold steady through the rest of the year as the economy experiences slow, steady growth.
He and other experts, meanwhile, are forecasting a big demand in vacation homes by the next century as baby boomers enter their retirement years. (Family-oriented resorts fit for retirement have been steadily springing up around the country, according to Franks.)
That was the reason behind Charles Sigmund’s recent purchase of a $230,000 four-bedroom contemporary house on the Lake of the Ozarks in Missouri. Though a bit beyond the baby boom age, the St. Louis eye surgeon and his wife, Sharon, would someday like to retire at the lake.
