February 9, 2008
The affects of demand for second home real estate is already being realized in America and around the world, because these are not second homes, these are future primary residences.
There were 36 million people aged 50 to 59 in the United States in 2005, and the median age of second homebuyers was 52. The lines between what is a primary home and a second home are being blurred.
Traditionally, a second home was a vacation spot, more than 50 miles from your primary home. A primary home was a residence near work, where you spent the majority of your time.
Technology and commuting opportunities at work have allowed some people to work from anywhere, once the kids are out of school, home is where the heart wants to be. Trends toward owning multiple residences are rising, 12% of these second homebuyers will buy multiple vacation homes. Today, 2% of these buyers own a third or fourth home, expect this figure to rise. If even a low percentage of the 78 million boomers choose to own multiple residences, the demand for vacation homes have just begun to be realized.
This demographic force will be trading vacation and second homes for the next 2 decades. They are reshaping the housing market in America today. The better, better, besting phenomenon will affect the second home market as well.
You can see some of the effects of this demand in the product mix of new housing. The 1990’s saw resurgence in popularity of the condominium form of ownership. Many housing analysts claimed the stellar rise in condo development was mainly due to land costs, surely this was a factor, but as important was the rise in single parent families, many caused by divorce at middle age.
The median age of the boomer generation was in throws of the 40’s by 1997 a significant milestone age for divorces.9 Will many boomers reach retirement age as single adults? If so, the housing demand is double previous generations who had much lower rates of single-headed households.
The U.S. population is expected to grow 25% in the next two decades. This population growth alone would support abundant residential construction in America, and is one of the reasons I believe any ‘housing bubble’ or drop in property values will be short lived. Add to the natural population growth, the number of newly formed single-head households, and it is easier to be bullish on real estate.
The key is which type of housing is in new demand. A focus of developers must be on the demand for better more central locations, desirable and livable cities, higher quality amenities, services and luxuries associated with our housing stock.”
Story from www.vacation-finance.com
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