Even though the investment portion of the vacation home market dropped steeply in 2006,for a variety of reasons, it is still a market niche worth a second look. As they say in economic reports about the overall U.S. economy, it is supported by solid ‘fundamentals’. In other words, the underlying economic data, including demographics, personal income, inflation, etc., support optimism about long term prospects for economic growth. So too, the demographics underlying the second home market support opportunities for long-term appreciation of such properties.

Among the huge number of baby boomers, (78 million in the U.S. and over 200 million worldwide), there is going to be an increasing demand in the next 15 years for vacation homes that may double as retirement destinations. The soon-to-retire boomers are part of what has been called by noted demographer Peter Francese “the richest generation in the history of the planet”. By some estimates, the earned and inherited wealth of U.S. boomers approaches 2 trillion dollars.

With these kind of underlying fundamentals, vacation homes sales in certain markets, while suffering now, is likely to pick up and return to positive territory in coming months.

If you are thinking about looking at a second home for family use and as an income property, you should take a few minutes to read the following article, featured recently in Realty Times. It offers some useful tips about how to choose the best market and property for investment and warns of some pitfalls. As always, every investment strategy has both pros and cons. The old adage ‘caveat emptor’ (let the buyer beware) applies in turbo for real estate investments during a market slowdown. But a correct pick and purchase made when prices are down can reap big rewards when the market stabilizes and begins to appreciate again, as many second home markets are predicted to do.