Another bright spot in the real estate news.  This is particularly good news for vacation destinations, such as Florida or Arizona. 

Investment and Vacation Home Sales Jump

Sales of investment and vacation homes accounted for 38 percent of all home sales last year, the highest level since 2005, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR) 2012 Investment and Vacation Home Buyers Survey. Investment sales spiked 64.5 percent to 1.23 million in 2011 from 749,000 in 2010. Vacation home sales rose 7.0 percent to 502,000 from 469,000 the year earlier. Investment homes accounted for 27 percent of all transactions last year, up from 17 percent in 2010, while vacation homes made up 11 percent of all transactions in 2011, up slightly from the 10 percent recorded in 2010.

The boom in investment purchases can be attributed largely to cash buyers, according to NAR chief economist Lawrence Yun. Last year 49 percent of investment buyers and 42 percent of vacation-home buyers paid in cash. “During the past year investors have been swooping into the market to take advantage of bargain home prices,” he says. “Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property.”

Half of all investment home purchases last year were distressed properties, as were 39 percent of vacation home sales. The median price of an investment home sold last year was $100,000, up 6.4 percent from 2010. But vacation home prices plunged 19.1 percent to $121,300 in 2011 from $150,000 the year earlier. NAR finds that half of all investment buyers purchased their properties to generate rental income, while 34 percent wanted to diversify their investments.