Record-Eagle,  July 15, 2006                    Cookie McCullough

Why Vacation Homes Are Still Hot!
The second home market is gearing up for what is virtually certain to be a series of record years for sales volume. New research suggests that the buyers currently jumping into that market are strikingly different from buyers barely three years ago. The new wave of second home purchasers are far more investment-oriented than their predecessors. Many more of them are buying to make money than to spend weekends at the beach.

Here in Michigan, many second homes are purchased as seasonal or vacation homes, all in a cluster in the northern part of the state. The 2000 U.S. Census estimated that Michigan, with 235,371 second or vacation homes, ranks fourth among the states, behind Florida, California, and New York.

Second homes are becoming more and more accessible to families with an average income. In the past decade or so, there has been a real shift away from the upper end being the only folks who could afford a vacation home.

Home equity to burn, favorable tax laws, and record-low mortgage rates are all converging at an opportune time to make buying your vacation home a dream come true.

Using home equity wealth to buy a second home is the second most common use of home equity – behind using equity to buy a move-up home. In the past, vacation homes didn’t appreciate very quickly, but that has changed. In many cases, vacation home owners get the same mortgage interest tax write-off they get for their first home. About half of all second homes are investment properties, the rest are used for fun.

Vacation homes are a lot more fun to use than stock certificates. The cost of living is a lot more expensive than it was 10 or 15 years ago, it’s a good idea to get a head start on retirement.

Historically, vacation home buyers most often are simply after the good life they’ve earned. An A-frame on the slopes, a cottage on the beach, a cabin by the lake – a place to get away from it all. The house may become a retirement home, an inheritance for the kids or even a status symbol.

If this is the year you will be shopping for a second home – either to use as a vacation home or as investment property – you’ll become a statistic in one of the fastest growing markets in real estate.

The most popular locations for second homes are near bodies of water and rural settings or smaller towns. The trend is to be close to the conveniences such as shopping, medical facilities, the arts, and fun activities but away from the hustle and bustle of the big city.

Second homes are everywhere! Determining the best location for your second home isn’t easy. The following is a list that may help with the process of finding a second home.

- Find an area that is appropriate to your lifestyle by defining your interests.

- Determine the ideal travel distance. This is a matter of personal preference.

- Research locations. Find an area that suits your needs.

- Select the desired location. Within the destination, you have to pick a community.

- Make inquiries with local residents. You need community details often available only from residents.

- Visit destinations. Make sure this is the place to live.

- Review financing options. Involve your tax professional in the financing part of the deal.

- Purchase through a waterfront/resort real estate professional – they are your eyes and ears in the area.

- Enjoy the process. Have a little fun with it – everything doesn’t have to be perfect.

When was the last time you spent a weekend going to your safety deposit box, and taking your gold out of the box and sitting there for the weekend with it at home. A second home gives you the growth of the gold (or more), plus you get to enjoy its company. Property values are up 20 percent in the past 12 months, and 30 percent in the past five years.

In Michigan, you can’t dismiss the value of water. There are many lavish, and not so lavish, vacation homes dotting various shorelines. Water features are still the Number One attractions for vacation homes. Given the law of supply and demand, you know what that means for prices.

Once upon a time buying a second home was something only the very rich and influential could afford to do - not so anymore! Today the real estate market has become more and more accessible (and affordable) for those interested in purchasing a second home, whether for investment purposes or for pleasure. The second home market is still very hot!