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Vacation, investment home purchases way up in 2012

 Here’s some more evidence to support the notion that the real estate market – and the economy in general – is on the upswing.

PrintThe National Association of Realtors says that the sale of both investmnent homes and vacations home increased by quite a lot in 2011:

  • Investment home purchases rose 64.5 percent, from 749,000 in 2010 to 1,23 million in 2011.
  • Vacation home sales rose 7 percent, from 469,000 in 2010 to 502,000 in 2011.

(The NAR defines vacation homes as recreational properties purchased for the buyer’s personal use. It defines investment homes as residential properties  purchased with the intent to either rent to others or to keep as investments.)

The market share of vacation and investment homes purchased in 2011 is at its highest point since 2005, NAR reports. The information was contained in NAR’s 2012 Investment and Vacation Home Buyers Survey.

Accortding to NAR’s chief economist, Lawrence Yun, investors used cash to take advantage of the favorable market conditions in 2011.

Lawrence Yun

Lawrence Yun

“During the past year, investors have been swooping into the market to take advantage of bargain home prices,” he said. “Rising rental income easily beat cash sitting in banks as an added inducement.”

Yun also said 41 percent of investor buyers purchased more than one property during the year.

The upswing in sales, Yun said, show that the market is able to absorb the foreclosures that are coming into the market.

“Small-time investors are helping the market heal since REO (bank real estate owned) inventory is not lingering for an extended period,” he said. “Any government program to sell REO inventory in bulk to large institutional companies should be limited to small geographic areas. Even where alternatives are needed, it’s best to rely on the expertise of local businesses, nonprofit organizations and government.”

Yun said 49 percent of investment buyers paid cash in 2011, as did 42 percent of vacation-home buyers. Half of all investment home purchases in 2011 were distressed homes, as were 39 percent of vacation homes. Of buyers who financed with mortgages, Yun said, large downpayments were typical.

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Want to talk about investing in Florida Gulf Coast real estate, or about purchasing the perfect winter vacation home? Get in Touch! 727-643-7100, or [email protected].

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