In the tech-driven, economic era gone by, investors collected stock options and stock-heavy portfolios like they were going out of style.
They did.
Keeping up with the Jones today means buying a second home.
Based on strong second home purchases in metropolitan areas and the price of second homes purchased, the National Association of Realtors estimates that most second home purchases in the first quarter this year were for investment purchases.
"That's a flip of the assumption that second homes are typically recreational sales, but it underscores the trend in recent years and our benchmark study underscores that," said Walter Molony, spokesman for NAR.
The benchmark "2002 Profile 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 more recent purchases revealed the percentage purchasing second homes for investment purposes rose from 20 percent in 1999 to 37 percent of second home sales in 2002. Now they may be more than half of all purchases -- if only temporarily.
NAR's 2003 Profile of Home Buyers and Sellers reveals indications that "a majority of second home purchases in the first quarter were investment properties."
"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," said David Lereah, NAR's chief economist.
"This may be a weather effect, but there appears to be a seasonal trend in the location of second homes 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," Lereah added.
The 2003 profile also shows that during the first quarter, 15 percent of home buyers 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.
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. NAR's bench-mark study showed the typical investment property value is estimated to be 15.3 percent less than recreational property values.
So how can you get the most out of a second home purchased for investment purposes?
Shop for a second home much in the same way you shop for your first home. Buy the cheapest home in the best block or buy into the cheapest neighborhood in the best community, both to give the home's value room to grow.
Look for appreciation potential, typically found in areas where demand eventually will exceed supply. Avoid heavily marketed, but unproven areas. You want property with future marketability for you or your heirs.
Find a home in close proximity to the activities you enjoy -- shopping, night life, recreation, culture, and others. The more activities the better potential for renting the property at a decent rate and selling at a high price later.
Save your cash for the purchase and consider "try-before-you-buy" mini-vacation getaways offered by timeshare developments in the area where you are considering a purchase. For no more than a nominal fee, if that, you are obligated to take a tour of the development, but the rest of the two-to-three day jaunt gives you plenty of time to check out the community and a potential second home.
Published: July 18, 2003
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 A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the
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