Second homes becoming more popular

With our fast-paced, activity-packed lifestyles, many people are opting to take their vacation time as extended weekends in place of two- or three-week holidays. That trend has translated into a growing demand for second homes that are not far from home.

A recent survey by the National Association of Realtors showed that 42 percent of second homes were in the same state as the owners' primary residence. Increasingly, buyers are looking at vacation getaways that are within a two- or three-hour drive. Whether it’s a cabin on the lake or a mountain retreat, people are looking for a convenient getaway that they can use throughout the year.

Second homes continue to boom 

Over the past 20 years, the number of second homes in the United States has more than doubled. A number of factors have led to the recent increase in second-home sales.

The Taxpayer Relief Act of 1997 allows married taxpayers who file jointly to keep, tax-free, up to $500,000 in profits on the sale of their principal residence, provided they’ve lived there two of the prior five years. The tax change gave homeowners an opportunity to buy a smaller primary residence and use some of their home equity to purchase a second home.

In addition, property values in most areas have appreciated dramatically over the past few years. This increased equity, combined with low interest rates, makes a second home an affordable option. For most homeowners, second homes aren’t necessarily expensive houses or condos in resort areas—they’re smaller, less expensive cottages and cabins that provide an escape from the bustle of city or suburban life.

Mixing business with pleasure

As the line between our business and personal lives continues to blur, a growing number of owners of vacation homes are spending nearly as much time at their weekend retreats as they are at their primary homes. In many areas, telecommuting has transformed what once were summer or winter getaways into true year-round second homes.

Computers and cell phones allow those who have flexibility in their job to work from anywhere. When researching a location for a second home, be sure to consider cell phone reception and the availability of Internet access. If you'll be doing some work from your vacation spot, you’ll also want to plan for creating a home office space that meets your needs.

Second homes as investments

While most second homes are used as vacation properties, they can be a smart investment as well. Real estate values have risen steadily over the past five years, and second-home prices have kept pace with the overall U.S. market. Like all real estate, the appreciation compounds on a tax-deferred basis. You don’t pay tax on the profit until you sell your property, and even then you can roll the proceeds into another investment property to defer taxes. Check with your tax advisor about the tax implications for your situation.

Some homeowners planning for retirement end up making their second home their primary residence. Often, retiring homeowners will sell their first residence, then pay off their second home with the proceeds, and still have extra money for living expenses. Ask yourself if your vacation getaway will be your full-time home someday, and make sure your retreat is in an area where you really want to live for the long term.

Finding your ideal vacation home

If you’re thinking about buying a second home, here are some questions to consider.

• What do I want to spend my time doing?

Think about the kinds of activities you like to do when you take a vacation. Do you love to ski or golf? Are you looking for lots of nightlife or plenty of solitude? Your leisure activities will help point you to the right location.

• How far am I willing to travel?

A recent study of second-home purchases found that the median distance for vacation homes was 185 miles from the buyer’s primary residence. A four-hour drive may not sound like much, but hitting rush-hour traffic on a Friday evening after a taxing work week can be daunting. If you plan on making your second home a weekend getaway, you’ll use it more regularly if it’s within a few hours’ travel of your primary home.

• What locations appeal to me most?

Once you’ve narrowed down your choices, do a little research. I can help you with information about climate, amenities and prices in the locations that appeal to you. If the ski chalet or beachfront cabin you have your eye on costs more than you want to spend, I can work with you to find alternatives within your price range or refer you to an agent in another area.

• Is this really where I want to buy?

Once you’ve found a location you like, rent a place there during the time of year you plan to be there most. The sleepy seaside town you loved to visit last winter may be jammed with traffic all summer. Resale value is important as well. I can help you evaluate the potential for future appreciation based on trends in the market.

• Can we afford it?

Second-home loans are slightly different from those for primary residences. I can refer you to a mortgage lender who will evaluate your current situation and find the best financing options.

Getting started

My web site (NWHomePro.com) is the ideal place to start your research. Click one of the links under the "Find Property" menu near the top left of any page of NWHomePro.com to search all available properties offered by real estate firms throughout much of Oregon and part of Washington. You will be able to find properties according to your desired community, price range and other features.

If you’re looking at purchasing land to build your own home, I can help you find the right property and recommend a process for locating builders in the area.

If you're looking beyond Oregon, Bryson Realty has relationships with qualified, licensed agents from other real estate firms in the western United States. Wherever you’re looking, chances are we can find you the right expert who really knows that area.