Not only are we in a wealthy economy - but the same economic indicators that favor first home ownership also are paving the way for the second home purchase.

Thanks in part to last year's new tax law changes, families can afford to make home purchases based on needs and desires rather than tax consequences. The Taxpayer Relief Act of 1997 excludes up to $500,000 in capital gains when a homebuyer sells a home, making it more possible to own and liquidate a second property.

In NAR's recent homebuyer/seller survey for 1998, vacation homes statistics were included for the first time. Although second homes accounted for only 2 percent of purchases according to respondents, that means over 107,000 vacation homes were sold through Realtors® in 1997.

In some cases, the leading edge of the baby boom generation is using equity from a home sale to trade down to a smaller, easier to maintain primary residence and also buy a second home, possibly as a trial retirement home. Or they may choose to move-up to a larger home and still afford a second home. Favorable economic factors such as demographics, tax changes, the growth of wealth due to the unprecedented stock market, tax law changes and other positive indicators are giving the green light to many second home purchases.

The relatively wealthy Boomer demographic is also known to spend top dollar for consumer goods, and will tend to view buying properties in resort communities as investment opportunities. According to recent research by Coldwell Banker, all the factors are in place to maintain a strong housing market. "Our research shows that consumers are interested in a better quality of life, which includes owning a second home," said Alex Perriello, President and CEO of Coldwell BankerŪ.

With the largest wave of baby-boomers turning 50 this year, and another 4.2 million reaching their fifties every year, there is a large segment of the population that is in the position or will be shortly to enjoy the good life - in a second or vacation home.