The Second Home Market
The second home market is still an active one. Twelve percent of homes purchased in 2008 were not primary residences, but vacation homes, according to studies conducted by the National Association of REALTORS® (NAR).
The vitality of the second home market is important because it provides stimulus to the economy. And, since second home buyers are more optimistic about real estate markets, it helps to offset some of the dire predictions by some pundits.
People purchase second homes for a variety of reasons according to NAR’s studies:
- 89% buy for family vacations
- 27% buy to diversify investments
- 27% buy to use the property to rent to other vacationers
- 26% buy to use as a primary residence in the future
- 17% buy for use by a family member or friend
Research Your Second Home Purchase Carefully
Given the different objectives of second home buyers, there are just as many things that need to be considered before you buy.
Research the area – talk to local residents to find out what they like about the area and investigate local tax implications and regulatory issues.
Pick your lifestyle – once you’ve settled on an area, think about the kind of lifestyle you want to have in your second home. A single family home would provide more privacy. Condos or villas require less maintenance than a detached home, and may be easier to rent. If you’re planning to turn your secondary home into a primary residence at some point, make sure you’re considering what your needs will be at that point.
Explore tax implications – In most cases you can deduct the mortgage interest and property taxes on a second home if it isn’t rented as a business property. If you rent the property full- or part-time, the rules get more complex. There are also ways to take advantage of tax-free profit if you make the home your primary residence before you sell it, although the regulations surrounding this issue are changing.
Get Professional Guidance
Working with a professional who is experienced in the second home market will make the time you devote to your own research much more effective. The issues surrounding the purchase of a second home aren't the same for everyone - there are no clear cut answers.
Based on my knowledge of the local market and second home buying issues, I can give you the peace of mind you need when making this type of decision. Call me at 928-242-3275 or use the form below to send an email!