(March 28, 2007) Why are a growing number of home owners investing in second homes?...

People buy second homes for a wide variety of reasons often motivated by the location of their primary residence. City dwellers are looking for a weekend and holiday home in the country; snowbirds want a place in the sun where they can thaw out; southerners are looking for a place where they can escape the heat. A large number of Baby Boomers are eyeing retirement and second homes to provide them with an opportunity to invest in their retirement residence.
Lifestyle is the primary reason for second home ownership with investment opportunity coming in a strong second. Owning a second home can be a good financial move. Despite the current slow down in the housing market, vacation residential property is expected to continue appreciating. This is due, in part to Baby Boomers. This demographic group is reaching retirement age with more wealth than any previous generation. Surveys show that ownership of a second home consistently ranks in the top one or two priorities for Baby Boomers.
There are also tax benefits to second home ownership. Since mortgage interest is deductible for first and second homes, home ownership is still one of the best leveraged investments a person can have. While any profit on the sale of a second home is subject to capital gains, they are avoidable if you move into your second home and live there for at least two years.
Modern technology allows business people an opportunity to take their work to remote locations. This gives many executives and managers the luxury of using their second home more frequently than once was possible.

The growing number of reasons to own a second home is creating a market demand for good locations and quality homes. Smart investors, however will look to buy today in an area that's going to be hot tomorrow. So what are the ingredients that will turn a sleepy village into the next Aspen or Hilton Head?


A beautiful setting is a must, but here are some other important factors:
· Proximity to growing urban centers. Vacation towns typically need to be within a two- to
  three-hour drive of a major city, or at least reasonably close to a big airport.
· Plenty of recreational opportunities. There has to be lots of stuff to do beyond shopping,
  which is why most thriving resort towns are near lakes, beaches or mountains. Some cultural
  cachet -- a theater or film festival, galleries or museums -- is also nice.
· Decent weather. You have to be able to get outside to enjoy all that recreation.
  There is a strong tendency for second home owners to purchase condominiums over single
  family homes. Second home condos' owners have the advantage of ownership, without
  the hassles of maintenance, repairs and security concerns. For many, condominium living is
  all about freedom, the ability to enjoy life to its fullest. In addition, property values have been
  known to double in just five years, making a condominium purchase a wise choice for those
  looking to resell down the road.
  Second home ownership is expected to be as common in the future as two car ownership is
  today. Investment in a second home today will certainly be viewed as a wise decision in the
  future.

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