Paralleling the ailing economy, secondary homes -- vacation and investment homes -- all saw a significant sales decline, accounting for 30 percent of all transactions in 2008, a 3 percent drop from 2007. The National Association of Realtors' study also found that about a third of non-primary homebuyers opted to pay with cash.
In terms of units sold, vacation and investment property sales fell more than 30 percent and 17 percent, respectively, according to NAR's 2008 Investment and Vacation Home Buyers Survey. The average price of a vacation home dropped to $150,000 from $195,000 and investment homes experienced similar depreciation, falling to $108,000 in 2008 from an average of $150,000 the prior year.
Despite last year's abating market, the NAR expects the decline in second home sales to be only temporary. There are currently 88 million Americans between the age of 40 and 60--the prime age in which people begin to gain interest in purchasing a second residency. The typical second-home buyer was 46 years old and made a little over $97,000 a year. The majority of second home buyers were looking to use extra abode for vacation purposes, although more than a quarter of these buyers were looking to either diversify their investment portfolio, rent out for profit, or to use later on in their lives.
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