Zig while others Zag'' The Second Home Market

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Zig while others Zag.. The Second Home Market
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• Second Home market is comprised of Vacation Homes
  and Investment Homes.

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Stats

• 2nd home sales as a percent of all home sales was
  36 in 2006 down from 40 in 2005
• Unit volume for vacation homes in 2006 was 1.07M
  up from 1.02M in 2005.
• Unit volume for investment homes in 2006 was
  1.65M down from 2.32M in 2005.
• Vacation home buyer profile in 2006 was 44 years
  old, median income of 102k and purchase home 215
  miles from primary residence.
• Investment home buyer was 39, income of 90k and
  bought home 22 miles from primary residence
• Source NAR Investment/Vacation Buyer Survey
  4/30/2007

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Stats

• 1997 tax code changes propelled second home
  market by allowing capital gain exemption on sale
  of primary residence
• Vacation homes by geography- 25 NE, 13 Midwest,
  38 South, 25 West
• Investment homes by geography-24 NE, 17
  Midwest, 39 South, 20 West
• Mortgage???- Cash buyers represented 25 of
  vacation homes sales and 32 for investment
  homes. Median downpayments are 27 (vacation)
  and 23 (investment).
• 60 of vacation home buyers used realtors.

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Vacation Homes

• Lifestyle and strong demographics-future looks
  bright
• 8 of 10 consider it good time to buy compared to
  57 of primary buyers.
• 55 of vacation buyers likely to purchase again
  within 2 years
• Primary motivation is for personal use and
  investment is secondary

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Products

• Identify target consumer
• Vacation home median size is 1480 sq ft
• Investment home is 1520 sq ft
• Attached/Detached

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Short Term Rental

• Attached or Detached
• Second Home Use with Investment Home Cash Flow
• Strong Rental Income
• Avoid school concurrency
• Foreign National and Domestic purchasers

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CondoTels

• Sale is ROI
• Centralized Management-Onsite
• Highly Amenitized
• Tighter Mortgage Supply than STR
• Domestic and Foreign National purchasers

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Desired Amenities

• Water-Beach, Lake, Pool
• Boating
• Hunt/Fish
• Golf
• Biking/Hiking
• Winter recreation
• Tennis

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Amenities

• Resort style amenity
• Concierge
• Beach style pools
• WIFI
• Sundry desk
• Restaurant/Bar
• Game room

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Specs

• Vacation
• Two spec levels
• Limited option selection time-fly in/fly out
• Value add to appraiser?

• Investment
• Limit options to diminish can exposure (less
  emotion)
• Typically small option expenditures
• ROI focus

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Mortgage

• Investment
• LTVs falling to 80/20 and lower
• Closing cost contributions restricted to 2
• Available products declining

• Vacation
• LTVs 90/10
• Closing costs up to 6

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HOA

• Well drafted docs important
• Savvy buyers experienced in HOAs
• Rental restrictions
• Reputable management company due to absentee
  owners

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Closing

• Title company familiar with second home buyers
• Mail away contracts/closing docs
• Less closing visibility than primary buyer
• Brokers can increase complexity-final walks,
  mortgage docs, owner representation

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