Vacation Home Market Share Declines

Purchases of second homes accounted for 36% of all home sales in 2006, down from 40% the previous year, as investment-property activity fell sharply, according to the National Association of Realtors.Sales of investment properties fell 28.9% to 1.65 million in 2006 from a record 2.32 million in 2005. The median price of an investment house fell 18.3% to $150,000. At the same time, sales of vacation homes rose 4.7% to a record 1.07 million last year. But the median price of a vacation home fell 2% to $200,000. "We expected the drop in investment sales because investors left the market in 2006, which caused investment sales to fall much faster than the primary market," said NAR chief economist David Lereah, who is leaving the Realtors soon to join Move Inc. Meanwhile, vacation homebuying rose due to "strong demographic and lifestyle factors," he said.