Second Homes 2010

Home Affordable Modification Program
The financial reform bill signed into law by President Obama last week includes more help for homeowners who are having trouble paying their mortgages.

The President’s signature Home Affordable Modification Program has already committed 75 billion dollars to modify troubled loans and keep people in their homes, and the new legislation will dedicate one billion dollars more on top of that specifically to help homeowners who have fallen behind on their mortgage payments because they lost their jobs.

According to the Wall Street Journal, the money will be used to help out-of-work homeowners defer mortgage payments for three to six months.

Single Family Homes

We’ll start with single-family homes, which saw sales fall from just short of five million in May, to a seasonally adjusted rate of 4.7 million homes. But even with the sales drop month-to-month, that’s still some 370-thousand more homes sold this June than last. That’s important because year-to-year comparisons are generally more accurate than month-to-month swings, which can vary widely, depending on the season. And even with the tax credit’s influence waning, we’re still seeing prices hold their own. In fact, the 184-thousand dollar median is actually 23-hundred dollars higher than last year’s price.

Condominiums

The news is a bit better for condominiums. The seasonally-adjusted sales rate of 670-thousand units in June was 10-thousand condos short of May’s total, but that’s still 20 percent ahead of the more significant pace of a year ago, when just over 600-thousand units were sold. Median prices for condos did slip 15-hundred dollars, year-to-year, to a median of 180-thousand.

Price Range

Moving now to sales by price range, we see that homes are most commonly priced between 100 and 250-thousand dollars, with nearly half of the properties sold in June fitting in that range. Homes priced between a quarter and a half-million dollars are the 2nd most popular segment, making up about a quarter of all homes sold, followed by homes priced under a hundred thousand dollars, which make up one out of every five homes sold in the nation.

As we continue to ponder the strength of the nation’s economic recovery, it’s interesting to note that the fastest growing segment of the sales market continues to be in luxury homes, those priced over a million dollars. Those McMansions made up just a tiny fraction of all homes sold in June, just one and a half percent. But since this time last year, sales of those homes have increased by a third, proving that some people are making and spending money again, even if it’s not necessarily you and me.

No matter what price range your world revolves in, your REALTOR® is standing by to help you buy or sell your next home. The lazy, hazy dog days of summer can drag by without the help of a licensed professional, so pick up that phone today.

And not only were sales up, so were prices, with last year’s median for a vacation home coming in at 169-thousand dollars – a 13 percent jump from 2008.

Now, you may be wondering how sales and prices could be jumping for vacation homes when plenty of people are struggling to make ends meet. Well, you can chalk it all up to opportunity knocking. Think about it. When the recession tremors first began to rumble, many vacation home owners sold out because they needed money. Home prices fell, and suddenly, many people who had always wanted to but could never previously afford a place at the beach jumped into the market, driving sales and prices right back up again last year, especially in vacation hotspots like California and Florida.

If you’ve never considered buying a vacation home, you might think most second-home buyers are wealthy but that is not really the case at all. The typical buyer is 45 years old, and is married, with a median household income of 87-thousand, 500 dollars.

But there are would be real estate magnates out there, and this is where we flip the coin to see the other side of second-home buying. Those people who buy houses as investment properties largely to rent to others.

While vacation homes enjoyed strong growth last year, investment home sales took a big drop, down 16 percent from 2008. Prices took a dip in the category as well, to 105-thousand dollars, off three percent from the previous year.

Why the sharp contrasts between rising vacation home and falling investment home sales? Really, it’s matter of mindset.

Investment home buyers are demographically almost identical to vacation home owners. But, while vacationers are making a lifestyle choice, and purchasing primarily for their own use, investment buyers are making business decisions, gambling that they can find tenants for any property they buy. It only makes sense that investments would lag behind economic recovery. However, over the long term, demand for second homes of all types appears to be favorable, especially as the reins on mortgage lending continue to loosen.

So, are you a good candidate to own a second home, either for business or pleasure? The list of factors to consider is enormous, and so are the potential pitfalls and benefits. We couldn’t begin to cover them all here, but you know who can, your REALTOR®, of course! Your REALTOR® can provide you with all the tools you need to make an informed decision, whether you’re looking for that perfect getaway spot or an opportunity to build your nest egg as a

And where are the buyers coming from? All over the world, really – 53 different countries in all, although half of the sales can be tracked to just four nations. Canada comes in first at 23 percent, followed by Mexico, the United Kingdom and China, with 10, 9 and 8 percent of international sales, respectively.

Not surprisingly, these international consumers are choosing to settle in states where many Americans buy their second homes. Florida, California, Arizona and Texas together make up slightly more than half of all international sales, although 39 states in all drew at least some buyers from other countries.

Now, while sun-drenched locales do dominate international sales, overseas consumers are not just choosing the US because it’s a fun getaway spot. The changing value of the dollar has had a strong influence on international investors, and several news events from around the globe have impacted where those investors are placing their trust. The Greek financial collapse has shaken faith in the Euro, and so has the erupting volcano in Iceland. A potential conflict between North and South Korea has created tension in Asia. And all of that uncertainty is driving more foreign investment money into the US.

International buyers are realizing in many cases that American homes are more affordable and hold their value better than properties in their own countries. On a larger scale, international investors are sinking more money into treasury securities, which have the full backing of the US Government. And ironically, that extra international investment here is largely responsible for the record-low mortgage rates that American homebuyers are enjoying right now.

And here’s an extra bit of irony for you. While foreign investors are making our mortgage payments cheaper, most of them don’t get loans to buy homes here. 55 percent of international buyers pay all cash. No matter how they pay, this much is clear, The American dream is going global.