HOME, SECOND HOME
Purchasing Another Home Has Its Perks. To Make The Most of Them, Get The Facts Before You Buy
By Farnoosh Torabi
Brian Maloney's Fort Lauderdale, Florida,
second home offers peace of
His search led him 1,300 miles south to a $650,000 high-rise condo with views of the Atlantic. "I didn't hesitate," he says. And while he waits for the property to appreciate, the condo provides a getaway for Maloney and his friends and relatives.
In 2005, both investment and vacation properties skyrocketed to historic levels in the U.S., according to the National Association of Realtors. The trend, says the NAR's Walter Molony, was fed mainly by speculative investors. These days--not so much. The latest NAR report shows a steep drop in second-home investment sales relative to pure getaway-property purchases, with prices dropping and the speculative buyer now largely out of the picture. While year-over-year vacation-home sales grew 4.7 percent in 2006, investment-home sales plummeted nearly 29 percent.
The good news for investors is that there are now more choices and a growing population of desperate sellers. In fact, 10 percent of second-home purchases in 2006 were foreclosure or trustee sales, according to the NAR. On the flip side, buying a second home hasn't gotten easier. Experts urge buyers to be more patient, observant and prepared when it comes time to apply for a second home loan.
The bottom line, says Esther Muller, president of The Real Estate Academy: "People are thinking about second homes more intelligently."
Location, Location, Location
While Florida has been a top destination
for second homes, at least for
Still, he selected Fort Lauderdale
after noticing high-profile commercial developers breaking ground there,
a sign of future appreciation. "If you
Rusty Anderson, senior vice president of NorthPoint Real Estate Investment Services, advises clients to choose markets with job and population growth. Hotbed areas today, he says, include Albuquerque, New Mexico; Raleigh, North Carolina; and Portland, Oregon, all of which boast robust rental communities as well.
Paying It Down
Lenders aren't as open-armed these
days, and rightly so, experts say,
Farnoosh Torabi is a correspondent for TheStreet.com TV