Statistics and Demographics affecting Resort Real Estate and Second Homes

More frequently in the United States and Internationally, people are spending their free time away from where they live and are choosing to purchase second homes in recreational and resort communities for this pursuit. As technology has changed the real estate business and other industries, it too has made it easier to get away for a few days and still stay in touch with the office. Empty Nesters are downsizing their primary residences and are purchasing second homes for their extended family retreats while Baby Boomers are coming of second home buying age. In fact, during the next sixteen years, over 80 million Baby Boomers will reach their prime second home buying age according to the National Association of Realtors (NAR). With the changing economic times, those who have made money in other investments are now diversifying their portfolio with second home purchases. And most recently, in times of international security uncertainty, families have grown closer and are not traveling abroad, but looking for safe gathering places that these second home and resort communities offer.

Vacation ownership has attracted the interest of Wall Street and the participation of most major hospitality companies, such as Hyatt, Hilton and Marriott; as well as luxury hoteliers like Ritz Carlton, Four Seasons, and Rosewood Resorts. In addition, large companies, such as Intrawest, American Ski Company, Hines Group and Vail Resorts have been purchasing multiple ski mountains and resort areas whereas most recreational areas in the past have been operated by individual entrepreneurs. These large development companies always look at real estate development potential first when considering a purchase.

The vacation home market is the fastest growing segment of real estate on a percentage basis and currently accounts for 8.2% percent of the national housing stock. The American Resort Development Association (ARDA) said it expects even more pressure on resort property and vacation buying through the next twenty years as more Baby Boomers start looking for second homes. Right in line with the leading edge of the Baby Boomers and fostered by a strong economy as well as capital gains tax reform, the increase in second home ownership has increased dramatically in the last few years with over 6.4 million second homes owned today, up 27.5% from 1995 according to NAR. Peter Frances, founder of American Demographics and a consumer forecaster, suggests that the number of second homes could reach 9.8 million by 2010.

Nearly eighty percent of second homebuyers are married and the median age of the second homebuyer is 43, only four years older that the primary homebuyer. Others suggest that the peak buying years for second homes will soon be closer to 52 years of age or five years after an individual’s peak spending years. The first Baby Boomers are poised to turn 57 and as this largest single population group of 86 million begins to retire, a new wave of vacation extended family buyer has started to emerge. NAR forecasts that the demographic impact alone from large number of people in their forties and fifties entering the second home market will add 100,000 to 150,000 second home housing starts each year for the next ten years.

The number of elite purchasers in this second home buying market is increasing at a substantial rate. The baby boomers are already known as the wealthiest group in history. But in addition, more money is being made today by young people that at any other time in history. Echo boomers have already been seen infiltrating the second home market, many choosing to make their vacation home a place where they spend a majority of their time. These generations will become even wealthier as it is predicted that over 12 trillion dollars will be inherited in the next twenty years.

It is obvious that the demand for luxury homes in prestigious locations is increasing and it will be where buyers will spend their real estate dollar. Amenities such as golf, skiing, water and mountains are of great importance along with a natural and less populated setting. The most commonly mentioned dominant buying motives are family and privacy. It is not only where one can easily enjoy family and friends company, but it must also be a place to get away from the hustle and bustle. Today, quality of life has become as important as career success.

Another rapidly developing trend in this new time of erupting international crisis is that urban dwellers are showing an increased interest in second homes. “We are starting to see more urgency and people accelerating their plans for second home ownership.”, mentions John Helmering, Managing Broker of Gateway Land and Development, a real estate company in the Vail Valley.

Three factors that have encouraged this are: people are traveling domestically more frequently and internationally less; a reassessments of values and more concern for family and friends; and a more security conscious buyer looking for their safe haven in small towns that are less vulnerable to the international urban threats.

For more information on resort properties, please contact: Gateway Land and Development 970-926-6777

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