By Teresa King Kinney, CEO, Realtor Association of Greater Miami and The Beaches
Agents who focus on the second-home market stand to expand their real estate businesses and increase their profitability. More home buyers are purchasing vacation and second homes in the United States than ever before. The second-home market is solid, and Baby Boomers continue to make a huge impact. The number of minorities purchasing second homes is also increasing.
According to an annual report by the National Association of Realtors (NAR), second homes represented 35 percent of existing single-family, condo and new home sales in 2004, a 16 percent increase from 2003. In 2005, 40 percent or one in four residential transactions were for second homes.
The NAR Profile of Second Home Buyers: 2005 indicates that the vacation homes increased by 19.8 percent while investment properties increased by 14.2 percent.
U.S. Second-Home and Vacation Buyers
What has caused the surge in second home and vacation sales?
“To begin with, the baby boom generation is driving second home sales,” says David Lereah, NAR Chief Economist. “They’re at the optimum point in life when people become interested in second homes. They’re at the peak of their earnings, interest rates remain historically low and boomers want to diversify investments.”
But, according to Lereah, there are significant motivational differences between vacation-home buyers and investment buyers.
“Vacation-home buyers are making lifestyle choices and purchasing primarily for their own enjoyment, he says. “Investment-home buyers are seeking rental income and portfolio diversification, although vacation-home buyers also mentioned diversification.”
Agents who seek a strong niche market will be pleased to learn that second and vacation homes will continue to be in demand. “Vacation home sales will remain strong for the foreseeable future given the fact that baby boomers are favorably positioned in terms of affordability, as well as being at the stage in life when people are most interested in making that kind of lifestyle purchase,” Lereah notes.
International Second-Home Market
Real estate agents in South Florida have an even greater advantage in marketing to second-home buyers because our market is a top destination not only for U.S. buyers and investors, but also for immigrants and other international clients. South Florida is the fifth city in the United States for global real estate investment according to a survey conducted by the Association of Foreign Investors in Real Estate in 2004.
Jeff Hornberger, NAR International Market Development Manager, offered valuable information to participants at the 10th Annual International Market in Miami. His presentation included insights for agents looking to profit from the second home and international markets:
• Latin American buyers often seek a flight capital when fleeing political instability, proximity to their home country and a cultural level of comfort.
• European buyers are still looking for bargain prices in the United States due to the currency exchange between the U.S. dollar and the Euro. According to Excellent Real Estate Services and a 2003 survey of Germans living in Florida, 100,000 Germans own second homes in Florida. Germans bought 2,000 homes in Florida, 75 percent on the west coast of the state. About 50,000 British own second homes mostly in Central Florida. Brazilians own 50,000 properties in South Florida.
Other Markets to Target
Although there are great opportunities to serve second- and vacation-home buyers in our own market, there are also opportunities elsewhere. Realtors have access to resources, education and tools that can help them close real estate transactions worldwide.
By completing the Certified International Property Specialist (CIPS) program require-ments you can prove your expertise international real estate (www.realtor.org/international).
Obtaining the Transnational Referral Certification (TRC) from the International Consortium of Real Estate Associations (ICREA) can link you to agents around the world who are also certified, creating unlimited referral business opportunities.
It is also crucial that agents are aware of emerging markets throughout the world. This will help you narrow your niche and target the right clients.
Knowing the best countries for retirement, for example, can help you come up with a business plan and familiarize yourself with countries your clients may be have an interest in. According to International Living, the Global Retirement Index lists the best five countries as: Panama, France, Nicaragua, Croatia and Romania.
Latin Trade Magazine publisher Mike Zellner presented an outlook on Latin American also at the 10th Annual Inter-national Real Estate Congress. While also referencing emerging retirement communities, he indicated short-term opportunities included increased activity with Mexico, Colombia, Central America and the Caribbean. Long-term opportunities should result from deeper relationships between the U.S. and partners in the region.
Attending international real estate events is another way to connect to agents who in turn can connect you to numerous prospective clients. The International Referral Network created by RAMB links its members to members of over 50 partner associations. Staying informed and getting involved with your national, state and local associations will also help open doors that will enhance your ability to connect with more clients, increasing your second home, vacation and international real estate business.
Visit www.miamire.com to view a list of upcoming international events and to access resources cited in this article.
The 12,500-member Realtor Association of Greater Miami and the Beaches (RAMB) includes the Residential Association, Realtors Commercial Alliance and the largest local International Real Estate Council in the nation. RAMB has been serving the industry, public and community for 85 years.