A new study during the first quarter of 2003 shows 15 percent of homebuyers were either purchasing a second home, already owned a second home or were buying a new primary residence and keeping their existing property as a second home. Four percent of all homes purchased were second homes, compared with 5.5 percent of all purchases in 2001.

David Lereah, chief economist for the National Association of Realtors, said the survey may show a number of seasonal factors in the second home market, although demographic trends are consistent with previous findings. "Considering the unusually bad weather conditions across much of the country during the first quarter of this year, it's no surprise that second homes accounted for a smaller percentage of transactions than we generally see on an annual basis," Lereah said. "However, buying patterns show a marked shift toward second homes purchased as an investment."

Typical second-home buyers are 47 years old and have a household income of $85,900; roughly 66 percent are married couples. Fifty-eight percent bought a detached single-family home in the first quarter, but only 21 percent purchased in a resort, recreation or rural area; 66 percent were in an urban or suburban area.

"The concentration of second home purchases in metropolitan areas during the first quarter is the reverse of what we see on an annual basis, where most are purchased in resort, recreation or rural areas," Lereah said. "This may be a weather effect, but there appears to be a seasonal trend in the location of second home purchases, with winter favoring investment properties in metropolitan areas. In addition, buyers generally have shown a greater interest in investment properties over the last few years."

An association benchmark study of second-home owners, published last November, showed that 78 percent of all second homes were used primarily for recreational use. However, an examination of recent buyers shows the percentage purchasing second homes for investment purposes rose from 20 percent in 1999 to 37 percent of second-home sales in 2002.

The median second-home price during the first quarter was $150,000, up 6.1 percent from $141,400 in the first quarter of 2001. First-quarter second-home prices typically are 12.7 percent below annual prices, another indication that a majority of second homes purchased in the first quarter were investment properties. The study showed the typical investment property value is estimated to be 15.3 percent less than recreational property values.

"Right now, the business for vacation homes and investment property is very brisk, and prices are rising with a low inventory of properties available in many areas," Lereah said. "Demographics will drive this market over the next decade with baby boomers in the peak years for buying a second home."

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.