April 10th, 2015
Baby boomers are driving up sales of vacation homes, according to the National Association of Realtors (NAR).
The NAR’s annual survey found these sales exceeded their 2006 peak in 2014, with boomers leading the charge. Year over year, there was a 57.4 percent improvement for new and existing vacation home sales.
“Furthermore, last year’s impressive increase also reflects long-term growth in the numbers of baby boomers moving closer to retirement and buying second homes to convert into their primary home in a few years,” said NAR Chief Economist Lawrence Yun.
The rise in vacation home sales was also more evident among wealthier families, Yun said. Boomers of the upper class are leveraging their extensive funds to purchase getaway homes not only for a future primary residence but also investment opportunities. While they’re not utilizing their vacation properties, these affluent individuals can rake in additional income from rent payments.
Factors that drove boomers to a vacation home frenzy
The NAR noted positive economic factors, including home prices that were affordable to boomers and improving personal finances, encouraged these consumers to look into a second home. Specifically, the availability of bargains on distressed vacation homes gave boomers the opportunity to make a purchase.
“If they have the financial capacity to buy a vacation house today, once they officially retire in three to five years, they will turn that home into their primary residence,” Yun told CNBC.
Why the vacation home conversion is popular
The NAR report speaks to a trend many analysts have been expecting for some time: As the large generation of boomers reaches traditional retirement age, they will present a shift in housing – driving sales in key retirement destinations like Florida and the Sun Belt. The Florida Times-Union said these consumers are looking into a wide range of properties – from 55-plus communities to townhomes.
Much of the decision on which kind of home these individuals want stems from their expected needs as they age. Access to nearby amenities and single-floor properties are often sought by retirees, and popular vacation destinations can offer properties with these features while providing entertainment options boomers can enjoy with their families.
As shown by the NAR data, condos and townhomes were the most popular vacation property types, indicating the trend of retirees downsizing may still be prevalent.