rebuild.org finance news:

Back to Latest News Headlines

Second Homes' Demand Increases

[Jul 5, 2007.]


Rising mortgage rates, waning interest in subprime mortgages, and bigger-than-needed inventories have combined to give rise to disappointing news on the housing front. However, there is one sector of the housing market that appears to be doing well—the secondary home market.

Once upon a time, second homes were the exclusive property of the rich. However, more and more, middle-income people are considering second homes. The phenomenon appears to be most pronounced among baby boomers who are preparing second homes for their retirement.

Thornburg Mortgage President Joseph H. Badal was recently quoted in a published report as saying, "The demand for second homes is big and growing. Baby boomers are feeding the second home buying now, and young families are also in the market."

However, Badal recommends caution in purchasing a second home, since it requires a significant financial commitment. Badal says that, after the sale, many individuals find that the cost of the second home outpaces the benefits. The family may not use the alternative home as much as they had anticipated, meaning that the mortgage, insurance, and tax costs represent an unnecessary and expensive expenditure.

While the overall housing market has been sluggish because of a rise in mortgage rates, the secondary home market remains brisk, according to information obtained from the National Association of Realtors.

Sales of vacation homes increased nearly five percent to a record 1.07 million in 2005. The average buyer is 44 years old, has a median income of $102,000, and bought a home that was more than 200 miles from his or her main home. The vast majority of the homebuyers—close to 80 percent—were looking for a vacation home, while 30 percent thought the second home might become their main home in the years ahead.

Experts say those considering buying a second home should determine whether they want to locate in a traditional retirement area, or find a second home that would be nearer to their relatives. It's also important that second homebuyers feel comfortable with their purchases—otherwise, those second mortgages may be a little too much to take.

Julie Ann Amos
July 5th 2007
More Information:

  • Getting A Larger House – What Type Of Mortgage?
    Today, if you want a larger house, there are a number of ways that you can do it. In days gone by, however, about the only way you could do this was if you got a better job, received an inheritance, or to borrow money from a relative.

  • Could A Cash Out Mortgage Be For You?
    If you have ever wanted to get hold of some of that cash value that is tied up in your home's equity, then it is possible that a cash out mortgage may be your ticket. These mortgages are becoming popular lately because they enable people like you to get the access they want.

Recent Housing News

  • Home Sales Take a Hit
    Confidence among American home builders appears to be eroding. That's because house sales are apparently suffering from the one-two punch of stricter lending practices and increasing mortgage rates. [July 5th 2007]

  • Consumers Feeling Pinch of Higher Interest Rates
    American consumers appear to be taking a hit as a result of the rise in interest rates. The yields on the 10-year Treasure note, which affect a number of long-term interest rates, have risen sharply recently. The fallout is expected to have an immediate effect on homeowners and prospective homebuyers alike. [July 4th 2007]

  • More Trouble in the Housing Industry
    The name "Freddie Mac" has become synonymous with home-buying—and with good reason. The organization represents the second-largest buyer and guarantor of home mortgages. In other words, if you own a home, chances are good that you've had some dealings with Freddie Mac. [July 3rd 2007]

  • Forecast Darkens for U.S. Subprime Mortgage Market
    Subprime mortgages are often considered the wild cards of the U.S. mortgage industry. Extended to individuals who may have less-than-stellar credit, these mortgages are accompanied by a great amount of risk for lenders. [July 2nd 2007]


news subscription:

Easily subscribe to the rebuild.org news feed.

Read our news without even visiting our site!

Subscribe to our news


news archive:

Rebuild.org monthly news archive