Vacations and Travel - Trends In Second Homes

According to the Census Bureau, there were about 6 million second homes in 1999, including condominiums and time shares, up from 5.4 million in 1994 and up 288,000 from 1989. Industry analysts estimate the number to reach 9.8 million by 2010, an increase of 53% from the current year. Sales have been increasing steadily since 1991, with sales of 264,000 homes in that year, to 345,000 in 1997, to 377,000 in 1999, according to the National Association of Realtors. Unit sales have increased 30% between 1989 and 1999.

About 6% of homes purchased each year are second homes, although other sources have placed it higher (for example, analysis by Acxiom/Data Quick saw 13.1% of sales going to second homes, or 800,000 units in 1999).

People are not only buying more second homes, they're buying more expensive homes. The panel above compares median prices for all homes and second homes. Median prices mean that half are more expensive, half less expensive. Some of the increase, of course, comes from the increase in the cost of homes. Interestingly, the prices were nearly equal between 1993 and 1997. No doubt many second homes were purchased in expensive housing markets. But there is probably another reason: the willingness of people to spend more money on these residences. They seek "all the comforts of home." At the same time, this past decade saw an increase in the number of affluent people. Quite simply, many people could afford to make this type of purchase: as investment, vacation property, or both.

Who is making these purchases? The Census puts the median age of vacation homeowners at 52. In short, the Baby Boomer generation. As we've seen elsewhere in this book, they are retiring earlier and have increasingly active lifestyles. Many buy a place at the lake and entertain the grandkids on the weekend. An increasing number of homes involve no mortgage — they are paid for with cash, which speaks to the affluence of the purchasers.

What about other types of vacation properties? There are now more than 2 million timeshare owners in the United States. The U.S. leads the world in the number of owners. Sales have risen from $1.33 billion in 1992 to an estimated $4 billion in 2000, a 200% increase!

Will we ever stay in a hotel again?

Sources: Fogerty, Thomas A. "New Wealth Brings Surge in Two-Home Families." USA Today, February 11, 2000; "Second Homes/Recreational Property." Online. Available: http://www.realtor.org. January 16, 2002; "State of the U.S. Vacation Ownership Industry." Online. Available: http://www.arda.org. January 16, 2002; "Historical Census of Housing Tables Vacation Homes." Online. Available: http://www.census.gov. January 16, 2002.