Investment and Vacation Home Sales Top Pre-Recession Levels

Vacation and investment home sales reached their highest combined market share since 2005, according to a National Association of Realtors survey.

NAR Chief Economist Lawrence Yun said buyers took advantage of market conditions in 2011. ?EUR??,,????'??During the past year investors have been swooping into the market to take advantage of bargain home prices,?EUR??,,????'?? Yun told HousingZone.com. ?EUR??,,????'??Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property.?EUR??,,????'??

Investment home purchases, driven by the desire for rental income, were concentrated in suburban locations. Most vacation homes were purchased in suburban and rural areas in the South and West, by buyers in their 40s and 50s.

?EUR??,,????'??Clearly we?EUR??,,????'???re looking at investors with financial resources who see real estate as a good investment and who aren?EUR??,,????'???t hesitant to use cash,?EUR??,,????'?? Yun said. Large down payments were typical of buyers who financed their purchase with a mortgage. The median down payment was 27 percent for both investment and vacation home buyers in 2011.

Cash-only purchases have become more common in the investment and vacation home market in recent years: 49 percent of investment buyers paid cash in 2011, as did 42 percent of vacation home buyers. Additionally, half of all investment home sales and 39 percent of vacation home sales in 2011 were distressed homes.

?EUR??,,????'??Given the tight credit in recent years, many would-be home buyers for owner occupancy declined,?EUR??,,????'?? Yun said. NAR?EUR??,,????'???s analysis of U.S. Census Bureau data shows there are 8.0 million vacation homes and 42.8 million investment units in the U.S., compared with 75.3 million owner-occupied homes. Owner-occupied purchases fell 15.5 percent to 2.78 million.