Second-home sales according to the NATIONAL ASSOCIATION OF REALTORS® including vacation and investments properties accounted for 36 percent of all home transactions in 2006 were down from 40 percent in 2005.

In terms of market share, 22 percent of all homes purchased last year were for investment, down from 28 percent in 2005.  Another 14 percent were vacation homes, up from 12 percent in 2005.

NAR’s research shows the typical vacation-home buyer in 2006 was 44 years old, had a median household income of $102,200, and purchased a property that was a median of 215 miles from their primary residence.

Here are some findings from the survey:

• Buyers get younger.  In the 2005 survey, the median age of vacation-home buyer was 52, eight years older than in 2006.
• Family retreats.  In listing the reasons for purchasing a vacation home, 79 percent of buyers said they wanted to use the property for vacation or as a family retreat; 34 percent to diversify investments; 28 percent to use as a primary residence in the future; 25 percent for the tax benefits; 22 percent for use by a family member, friend or relative; 21 percent because they had extra money to spend and 18 percent to rent to others.
• Rural areas most popular.  In terms of location, 29 percent of vacation homes were purchased in rural areas, 24 percent in resorts, 22 percent in a suburb and 10 percent in an urban area or central city.  Sixty-seven percent were detached single-family homes, 21 percent condos, 8 percent townhouses or row houses, and 4 percent other.  One-quarter of vacation homes were purchased in the Northeast, 13 percent in the Midwest, 38 percent in the South and 25 percent in the West.
• Seen as long-term investments.  Vacation-home buyers plan to keep their property for a median of 10 years and 38 percent, the largest share of respondents, plan to keep their vacation home for 11 years or more.

Investment-home buyers last year were a median age of 39, earned an income of $90,250, and bought a home that was fairly close to their primary residence – a median of 22 miles.

Important reasons for their purchase of an investment home were 46 percent were seeking rental income; 43 percent to diversify investments; 23 percent for tax benefits; 18 percent to use for vacations or as a family retreat; 15 percent because they had extra money to spend; 13 percent for use by a family member, friend or relative; and 12 percent to use as a primary residence in the future.  Here are some more findings from the survey:

ü  Suburbs lead the pack. Thirty-seven percent of investment homes are in a suburb, 22 percent a rural area, 18 percent urban or central city, and 7 percent in a resort area.  Sixty-three percent are detached single-family homes, 26 percent condos, 6 percent townhouses or row houses, and 5 percent other.

ü  Most activity in the South.  Twenty-four percent of investment properties were purchased in the Northeast, 17 percent in the Midwest, 39 percent in the South and 20 percent in the West.

ü  Buyers paid cash.  Thirty-two percent of investment buyers paid cash for their purchase, compared with 25 percent of vacation-home buyers.

ü  Plan to sell after 5 years.  Investment buyers plan to hold their property for a median of five years, with 33 percent planning to keep for six years or more.  Even with the cautions on speculative investment, 12 percent of investment buyers plan to sell in one year or less, although some may be adding value by renovating.

The Federal Commission (FTC) and Department of Justice released their Federal ID theft prevention strategic plan.  The plan is the result of the work of a task force created by President Bush.  The recommendations include such things are reducing the usage of Social Security numbers by federal agencies, establishing national standards for private sector data collection and storage, increased education and training of law enforcement, and increased and sustained public education effort.  NAR was the first private sector partner in the FTC’s “Deter, Detect and Defend” ID theft prevention campaign.

The Senate Commerce Committee has approved S. 1178, the Identity Theft Prevention Act.  The first of what is expected to be a series of bills responding to the rising incidence of database breaches, S. 1178 would require businesses that collect sensitive personal information to (1) develop a written security program outlining steps that are to be taken to protect client information, (2) notify consumers whose information has been lost of the loss in a timely manner, (3) provide these same consumers with a toll-free telephone number to contact the firm following a breach and (4) report the breach to the Federal Trade Commission (FTC).  The FTC would also be responsible for enforcement, although the state attorneys general would also be authorized to enforce the measure.  The bill does not create a private right of action.