market share of 2nd homes nears 40%

Second home sales, which include investment and vacation homes, set a record in 2005, climbing 16 percent from the previous year to 3.34 million, according to a recent report by NAR.

The market share of second home sales increased from 36 percent of all residential transactions in 2004 to 39.9 percent last year.

With the baby boom generation driving second home sales, vacation homes accounted for 12.2 percent of the sales, while investment properties comprised 27.7 percent of residential transactions.

According to the report, vacation homes sales continue to thrive this year, while investment home sales are expected to decline. "Vacation home sales will remain strong for the foreseeable future given the fact that baby boomers are favorably positioned in terms of affordability, as well as being at the stage in life when people are most interested in making that kind of a lifestyle purchase," said NAR Chief Economist David Lereah.

"On the other hand, investment home sales are likely to decline this year, in part because of higher interest rates."

*taken from the california association of realtors bulletin, dated 4/13/06*