Second-home sales expected to rise

 

HONOLULU ADVERTISER April 23, 2006

BY LISA SCONTRAS

Custom Publishing Group

 

Sales of vacation and investment homes set records in 2005 accounting for a total of nearly 40 percent of residential transactions, according to the National Association of Realtors.

 

The NAR report, based on two surveys, shows that 27.7 percent of all homes purchased in 2005 were for investment and another 12.2 percent were vacation homes. Together, the market share of second homes rose from 36 percent of transactions in 2004 to 39.9 percent in 2005.

 

David Lereah, NAR’s chief economist, says that conditions are favorable for this trend to continue into 2006 and beyond.

 

“To begin with, the baby boom generation is driving second home sales — they’re at the optimum point in life when people become interested in second homes, they’re at the peak of their earnings, interest rates remain low and boomers want to diversify investments,” Lereah says.

 

Realtor Michael Koyama at Prudential Locations LLC credits the baby boomer demographic as the number one reason the second home market is on the rise locally as well, and adds that many boomers are looking for homes where they will eventually live, once retired.

 

“Hawaii is perfect for many of those investors,” says Koyama, who is a project sales manager at 909 Kapiolani. “The second-home market is very strong here and with the nation’s 78 million baby boomers in their peak earning and retirement-planning years, I think the trend will continue for the foreseeable future.”

 

 

The typical vacation-home buyer in 2005, nationwide, was 52 years old with an average income of $82,800. More than three-quarters of vacation-home buyers have no interest in renting their property out and 21 percent say it will become a primary residence upon retirement.

 

Robin Markle, Prudential agent says that’s true at The Watermark in Waikiki where she is sales director. Many of the buyers at this luxury condominium — currently under construction and scheduled for completion in early 2008 — are intending to retire in the unit someday.

 

“The idea of retiring in a location like Waikiki is a dream come true,” says Markle. “In addition to securing a future retirement home, our buyers are downsizing, relocating and looking for a vacation property to share with family and friends.”

 

Local experts say that Hawaii still has a lot of momentum and is still accepting new inventory — especially in the luxury condominium market in Waikiki and the Kapiolani corridor.

 

Joett Colgan, a recent buyer at 909 Kapiolani, says the appeal to her was the convenience of restaurants, shopping and entertainment all within walking distance of her condo.

 

“We’re not getting any younger and thinking ahead, it might be nice to not have to be so dependent on a car,” says Colgan, who works long hours and doesn’t like the idea of sitting in traffic. “I’m in that 50-plus group, so convenience is a big motivator.”

 

San Diego businessman Paul Woo and his wife recently bought a unit at The Watermark which they plan to use in their retirement years. They also just finished building a home in San Diego so they plan to use their Hawaii condo as a second home — spending three to six months a year here.

 

Lereah expects the long-term outlook for second homes to be favorable because more people will be moving into their prime second-home buying years. Currently, there are 36 million people aged 50 to 59 nationwide. However there are 45.2 million people between 40 and 49.

 

“That younger segment will become a driving force in the second-home market over the next decade,” says Lereah.

 

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