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Second home sales are booming
Americans are falling in love again, with leisure properties.
August 22, 2005: 2:11 PM EDT
By Les Christie, CNN/Money staff writer
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NEW YORK (CNN/Money) - America's steamy love affair with real estate is hot as ever. Nationwide, home prices jumped 13.6 percent in the 12 months ended June 30.

Increasingly, though, homeowners are guilty of straying from their primary relationships. They still love their homes but that doesn't prevent them from engaging in weekend trysts.

Americans purchased 1.02 million vacation homes in 2004, many of them within easy drives of their hometowns. That represented a 20 percent jump from the 850,000 bought in 2003. The total has more than doubled in the last four years.

Lorne Bassel, an executive vice president with Intrawest, a company that builds and maintains destination resorts, attributes at least part of the trend's strength to demographics.

With the aging of the baby boomers, he says, "there's going to be huge demand for people looking for leisure homes."

A big share of the market, according to Bassel, is going to companies that provide a soup-to-nuts package consisting of the residence itself as well as landscaping and maintenance services.

"People are into getting away and cocooning," says Bassel. "They want their second home to be a relaxing experience. They don't want to spend the weekend fixing things or mowing the lawn."

They don't want to spend hours driving to get there either. So many second-hand communities are being developed in areas with easy access to New York, Boston, Los Angeles, and other cities.

Investing in second homes

Although leisure still drives the market for most second-home purchases, there's been a dramatic increase in buying for investment purposes. Last year, according to the National Association of Realtors, about 23 percent of all property purchase were primarily as investments.

Many experts -- even some in the business of selling second homes to consumers -- caution that these investments rarely pay off.

"It's rarely a smart move to invest in a second residence just to get in on a real-estate frenzy, or just for a quick profit," says Michael Maynard, who helped developed a second-home community in Vermont called Quechee Lakes. "Second-home purchases should be based on lifestyle."

"There's been a huge appreciation in these properties over the last 10 years," says Bassel. But that doesn't mean you should count on those returns in the future.

Bassel says he has owned leisure properties himself. He thinks of them as good investments, but not for the monetary return. "You can't ski on a mutual fund," he says.

"People should really want the home and want to use it," says Maynard. "They shouldn't buy a second home regardless of the strength of the property market if they just want more real estate."

The folks from Intrawest put together a portfolio of second homes available through their company. To view them, click here.

Condos have been an even better investment than single-family homes recently. For more on that story, click here.  Top of page

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