NEW YORK (CNNMoney) -- Sales of investment properties and vacation homes soared last year as investors snapped up homes that were selling at beaten down prices.
Homes purchased by investors skyrocketed 64.5% to 1.23 million in 2011, up from 749,000 the year before, according to the National Association of Realtors.
Vacation home buyers also came out in larger numbers, with sales climbing 7% year-over-year to 502,000. Meanwhile, sales to ordinary home buyers, who plan on living in the home full-time, fell 15.5% to 2.78 million, NAR said.
"Investors have been swooping into the market to take advantage of bargain home prices," said Lawrence Yun, NAR's chief economist. "Rising rental income easily beat cash sitting in banks."
Many investors were on a shopping spree, with 41% of buyers picking up more than one property during the year, compared with 34% in 2010, according to NAR. The median number of properties they bought rose to three from two during that time.
And almost half of all investors paid for the properties with cash. Even buyers who secured a mortgage to finance the purchase offered hefty down payments. The median down payment for both investment and vacation-home buyers was 27%.
"Clearly we're looking at investors with financial resources who see real estate as a good investment and who aren't hesitant to use cash," said Yun.
Foreclosures have helped fuel the second-home sales surge. Half of the investment purchases made last year were distressed sales, either foreclosures or short sales, as were 39% of vacation home purchases.
According to NAR, the median home price for investment properties was $100,000, a bargain compared to 2005 when the median investment property sold for $150,000. Meanwhile, the median vacation home sold for $121,300, down 19% from 2010 and a significant decline from the median price of $200,000 six years earlier.
Most investors said they intend to hang on to the properties instead of flipping them for a quick profit. The typical investor said they plan to hold the home for 5 years, with half of them reporting that they purchased the property mainly to generate rental income.
In nearly every market in the nation right now, buying is more affordable than renting. Continued tight mortgage financing, however, makes it difficult for some buyers with less than stellar credit history to buy homes.
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.27%||4.22%|
|15 yr fixed||3.27%||3.27%|
|30 yr refi||4.23%||4.20%|
|15 yr refi||3.25%||3.25%|
Today's featured rates: