Sales of vacation homes in the United States plunged in 2010 to about half the record number reached in the real estate boom years of 2005 and 2006, research by the National Association of Realtors shows.
Last year, such sales fell to 543,000, down 1.8 percent from 553,000 in 2009, the data show. Sales of primary homes declined as well, down 5.6 percent in 2010 to 3.81 million, from 4.04 million the previous year, the Realtors association reported.
During the housing boom, vacation-home sales peaked at 1.07 million in 2006, up from the 1.02 million sold in 2005. During this period, sales of primary homes stood at 5.02 million in 2005 and 4.82 million in 2006, the Realtors association data show.
Also dwindling last year were purchases of vacation homes as investment properties bought to rent to others. Those were down 7.8 percent, to 867,000 in 2010 from 940,000 in 2009. Investment purchases reached a record 2.32 million houses in 2005.
At the height of the boom, second-home sales accounted for roughly 40 percent of the total market for previously owned homes. Last year, they were only 25 percent.
“Prices have fallen enough to attract investor demand in many markets, but my sense is that prices are not quite there yet to significantly revive second-home demand,” said Mark Zandi, chief economist at Moody’s Analytics.
“Prospective second-home buyers are still nervous about the broader economic environment and constrained by the availability of credit,” Zandi said. “It will probably take another year to get second-home buyers back in the market to a significant degree.”
Underwriting standards for both primary and secondary homes are tighter now, and investors must put down at least 20 percent on a one-unit property and more for two to four units.
Vacation homes, however, “can be done with 10 percent down, with very good credit and private mortgage insurance approval,” Philadelphia mortgage broker Fred Glick said.
Added Jerome Scarpello, of Leo Mortgage in Blue Bell: “The nice thing about the second home is you get the same rate as your primary residence, as opposed to the higher rate of an investment property.”
Last year, “second-home buyers purchased more distressed homes at discount than did buyers of primary residences,” said Lawrence Yun, chief economist for the Realtors group. Foreclosure or trustee sales accounted for 17 percent of investment purchases and 11 percent of vacation-home sales, compared with 5 percent of primary-home purchases, he said.
At the Jersey Shore, the overall number of properties listed for sale remains above its historic average, though it declined during the second half of 2010, according to an analysis of fourth-quarter data for Prudential Fox Roach by Econsult Corp. vice president Kevin Gillen.
“Both home prices and sales along the Jersey Shore appear to have at least temporarily applied the brakes,” Gillen said of the fourth-quarter figures.
As of March 1, he said, there were slightly more than 3,200 single-family homes listed for sale in Atlantic and Cape May Counties, down 13 percent from the 3,700 listed during the summer of 2010.
Just under 2,200 condominium units were listed for sale, Gillen said, down 9 percent from the nearly 2,400 listed last summer.
“With this reduction . . . it would now take 20 months to sell off the current inventory of Shore homes listed for sale, and 31 months to sell off the current inventory of Shore condos,” he said.
By contrast, the Realtors association said it would take 17.9 months to sell off the current number of homes for sale in the Philadelphia metropolitan area and 7.6 months to sell off the current inventory of homes in the United States, Gillen said.
Nationally, the median vacation-home price was $150,000 in 2010, down 11.2 percent from $169,000 in 2009. The median investment-home price was $94,000, 10.5 percent below the $105,000 median in 2009.
In 2006, the median price of a vacation home was $200,000, down 2 percent from $204,100 in 2005. For investment properties, the median price was $150,000, down 18.3 percent from $183,500 in 2005.
In recent years, all-cash purchases have become prevalent in the second-home market. Fifty-nine percent of investment buyers paid cash in 2010, as did 36 percent of vacation-home buyers, the Realtors group said.
In 2006, 32 percent of investment buyers paid cash; 25 percent of vacation-home buyers did so, as well.
Contact real estate writer Alan J. Heavens at 215-854-2472, aheavens@phillynews.com, or Twitter: @alheavens.