Vacation home trends for affluent individuals in America and Europe may be surprising in this tumultuous time for the housing, credit and stock markets. The next 12 to 24 months might not see a huge upswing of second home purchases, but a recent survey by Knight Frank and Citi Private Bank predicts much growth over the next decade.
Liam Bailey, Knight Frank Residential Research Director sees second home purchases slowing down for the time being, due to the sluggish economy of the world markets. "The market is still failing so buyers will wait for a period-perhaps another two years," says Bailey. But this does not mean that the affluent will sit idly by.
"The advantage for people with equity is that they can benefit from forced sales from others in the market," explains Bailey. "There are bargains beginning to appear in many locations. But due to tight credit you need to be fairly wealthy to take advantage."
The Knight Frank and Citi Private Bank, 2008 Annual Wealth Report notes "There is clear evidence that we are moving towards the end of the bull market in prime residential properties."
Likewise, the American Affluence Research Center's Spring 2008 Survey of the Wealthiest 10% of U.S. Households concludes that, "Plans to acquire a vacation residence (within the next 12 months) have never been lower." The survey qualifies this statement by noting that such purchases vary significantly between the affluent and the not so affluent. "Purchases of a vacation residence will most likely be done by those with annual incomes of over $200,000."
The consensus for vacation home buyers is to wait it out and see what the market will do in the next year or so. Meanwhile, the destination club and private residence club industry continues to grow despite the declining economy. As current buyers of vacation homes the destination clubs are well placed to take advantage of current softening in any of their target locations. At last weeks IMN Destination Club and Private Residence Club conference, most of the destination clubs said that developers looking for partnerships are constantly approaching them. The leading destination clubs are all continuing to add homes to their portfolios - which we'll highlight on this site as the homes are added.
For a more detailed assessment of vacation homes and destination clubs check out the article "Vacation Homes Compared to Destination Clubs".
The Knight Frank and Citi Private Bank survey group have not yet delved into destination clubs or private residence clubs as a survey topic. However, they do have it on their docket for the future so we'll report the details once they are published. Similarly the American Affluence Research Center plans to cover destination clubs and private residence clubs next year.