Boomers Keep Second-Home Market Afloat in NC

10/18/2007

Real Estate Market Focus

Boomers Keep Second-Home Market Afloat in NC

By Alton Gary Simpson

As baby boomers reach their peak earning years and are therefore more able to afford a second home, and tax laws continue to encourage reinvestment into real estate, they are influencing the second-home market by investing in retirement destinations and residences that fit their active lifestyle. Figures from the National Association of Realtors show that while sales of primary residences and investment homes dropped last year, sales of vacation homes rose nearly 5%.

A 2004 ERA Real Estate study revealed that nearly two-thirds of baby boomers own two or more homes. And according to the NAR 2007 Investment and Vacation Home Buyers Survey, the average baby boomer buyer is 44 with a median income of $102,000.

Mark E. Tipton, chairman and CEO of Whistler Investment Group and a developer of Grande Villas at Indian Beach, a luxury condominium residence on North Carolina's Crystal Coast - Carteret County - has followed baby-boomer housing trends carefully while planning this new community. So far this year, he has seen 29 units at Grande Villas sell at an average price of $950,000.

This is in sharp contrast to market statistics from the North Carolina Association of Realtors showing that the number of existing homes sold in Carteret County in August was down 20% from the year before as 170 homes sold in August as compared to 213 in August 2006. This is also down from the July 2007 total of 176 homes sold. The average price of an existing home in the county was $310,849 in August, up 5% from $297,461 during the same month last year. This was down 2% from July 2007, when it was $318,593.

Mr. Tipton noted that the luxury end of the market appeared to be holding its own, while sales at the lower end were falling off a bit. "People are buying value and when they see value, no matter what the economy is - and they're looking for coastal properties - they are going to buy it. That's what we're seeing and I think that's pretty indicative of the time," he said, explaining that the bang for the buck along the North Carolina coast was much greater than in other coastal areas of the country.

He added that he was seeing so much interest in the larger penthouse and three- and four-bedroom units at Grande Villas that the developer has to exercise the option of combining less expensive two-bedroom units to create larger units for sale. "It doesn't appear that the pricing - over $1 million - appears to be a factor."

"The baby-boomer generation is realizing that vacation homes aren't just for the elite anymore. Purchasing a vacation home is an investment that most see as more solid than playing the stock market, and it also gives you a place to retreat," said Mr. Tipton. "Developments like the ones on the North Carolina coast provide opportunities for those looking to enjoy their investment."

He noted that North Carolina was benefiting from the "halfback" phenomenon, where retirees from the Northeast choose the more temperate climate of the Tar Heel State as opposed to traditional retirement destinations like Florida. According to a July 2006 survey by ChangeWave Research, the Carolinas showed the highest growth in planned purchases for baby boomers compared to any other state and Pulte Homes' Annual Baby Boomer Survey currently lists North Carolina as the No. 1 choice among pre-retirees, 41-49 years old. There are currently 78 million baby boomers retiring or planning to retire in the near future. They value and want to be close to family. Approximately one-third of them plan to move three hours or more from their current home when they retire.

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