Real Estate Matters

According to a recent National Association of Realtors (NAR) buyers survey, second home sales in the U.S. accounted for 33% of transactions in 2007 inspite of a decline in the total vacation and investment homes sales.  During this same time, primary residence sales declined 10 percent to 4.34 million in 2007 from 4.82 million in 2006.  NAR Chief Economist, Lawrence Yun cited the disappearance of speculators from the market as the reason for the decline, leaving the market serious buyers.   The disruption in the mortgage market and tightening of credit during the second half of 2007 also impacted this market sector, but lifestyle factors and strong demographics (including a peak of population in their prime years for buying recreational property), point to a positive outlook for the vacation home market, according to NAR. 

While U.S. buyers may be taking a wait and see attitude, foreign buyers are taking advantage of the weak U.S. dollar and are propping up second-home sales.  Conversely, Inman News reports that U.S. buyers are looking abroad for their second home investment in such areas as Costa Rica, Belize, Mexico and Northeastern Brazil, taking advantage of newer resort markets where prices are still relatively low and the U.S. dollar can buy more than here at home. 

However, the housing market slowdown is mutating into a global phenomenon with real estate prices taking a hit worldwide, according to a recent article in The New York Times.  Housing markets that soared over the last decade are falling back to earth, according the the article, citing specific problems in the UK, Spain and Ireland.  Property analysts predict that some countries will face a tougher adjustment than in the U.S., including the possibility of a market collapse.  In emerging and developing economies the impact is less pronounced, but capital inflows have moderated.  Market stresses have hurt currency values, notably the sharp decline in the value of the U.S. dollar since mid 2007.