Home sweet (second) home Apr. 08, 2006 Sherri and Erin O'Boyle didn't have to go far to find the perfect vacation spot. When the Green Valley residents decided in 2000 to buy a getaway, they drove about 15 minutes east of their Legacy home to Lake Las Vegas Resort. There, they bought a 450-square-foot unit at Viera, a condominium-hotel community. The O'Boyles make it to the lake about once a month; when they're not in residence, they use their condominium to house friends visiting from out of town or rent it out to other vacationers. "When we visit Viera, even though we're just a few miles from home, we feel like we've been away," Sherri O'Boyle said. "It's a minivacation, with the activities, the shopping and the casino. But the condo has also been a great investment." A new study from the National Association of Realtors shows increasing numbers of consumers are, like the O'Boyles, snapping up second homes. A record 39.9 percent of homes sold nationwide in 2005 were bought as second homes, up from 36 percent in 2004. Of those secondary properties, buyers purchased 27.7 percent as investments and 12.2 percent as vacation homes. The association hasn't calculated percentages of second-home buyers in the local market. But area real estate observers say the proportion of leisure buyers and investors in the Las Vegas Valley depends on the submarket. Marketing Solutions, a real estate research firm, has surveyed local home buyers for 13 years. The company's findings: The number of new homes sold to second-home buyers in Las Vegas averages about 20 percent every year, including in 2005. Steve Bottfeld, a senior analyst with Marketing Solutions, cited two factors that could be keeping the share of second-home buyers in the local new-construction sector below the national average. First, mortgage lenders generally don't allow more than 25 percent of a new development to go to investors. With roughly half of its home-sales market in new construction, Las Vegas has "lending constraints" that most other markets don't have, Bottfeld said. In addition, many home buyers declare their Nevada vacation property as their primary residence to take advantage of the state's lack of income tax. Thus, the city's share of self-declared second-home buyers could be "artificially low," Bottfeld said. Mike Altishin, a Realtor with Realty Executives of Nevada, said about 50 percent of his clients in 2005 were buying properties as vacation retreats or investments. About 20 percent of the buyers he helped were buying vacation properties, and 30 percent bought local homes as investments. Those numbers are up significantly in the past few years; three years ago, vacation buyers were perhaps 5 percent of Altishin's clientele, while investors made up about 15 percent of his business. Altishin credited the jump in second-home buyers to a spike in local real estate prices in 2004. "People watched the stock market drop significantly (from 2000 to 2002), and they saw the increase in home values we had and decided to invest in the real estate market (rather than stocks)," Altishin said. "We were extremely undervalued, and people were looking for markets where they could invest their money and see gains." Buyers of second homes and investment properties represent a wide demographic cross section. Three-quarters of Altishin's buyers are locals, and the investors he's assisted include casino workers, stock brokers and doctors. Experts say baby boomers are the dominant demographic among vacation-home buyers. The National Association of Realtors' survey reported that the typical vacation-home buyer in 2005 was 52 years old, earned $82,800 a year and bought a property that was 197 miles from his primary residence. At Lake Las Vegas, where O'Boyle bought her retreat, the whole business model is structured around catering to baby boomers, said Cary Krukowski, the resort's director of marketing. "The buying power of baby boomers is going up every year," Krukowski said. "That is our primary market. They're at the prime of their life, they have money to spend and they're looking for an active lifestyle with golf, spa memberships, social activities and entertainment." About 60 percent of buyers at Lake Las Vegas are purchasing second homes or investments, Krukowski said. Of that proportion, 60 percent are shelling out for vacation homes, usually in custom-home subdivisions, and 40 percent are buying investments, mostly in condominium-hotel communities such as Viera. The local share of second-home buyers could rise in coming months as significant numbers of high-rise and mid-rise condominium communities come online. Since 2000, just a handful of high-rises have opened in the local market, including Turnberry Place, Park Towers and Metropolis, all on Paradise Road between Sahara Avenue and Flamingo Road. In 2006 and 2007, though, a spate of condo towers will begin taking in residents. Communities such as Sky Las Vegas, Soho Lofts, the Signature at MGM Grand, Turnberry Towers and Allure will all open to homeowners. And those luxury towers will have substantial contingents of second-home buyers. For example, the share of non-primary buyers at Turnberry Towers, under construction on Karen Avenue just east of Paradise, is 80 percent, with most of those buyers scooping up units as vacation homes rather than investments, property representatives say. Real-estate watchers forecast a sustained supply of vacation-home buyers and investors. "The probability of the vacation and investor markets drying up is zero," Bottfeld said, pointing to young baby boomers in their early 40s, affluent members of Generation X and investors from Europe and Asia as population segments that will continue to propel the nonprimary home market in coming years. Rising interest rates could affect the market, but few analysts said they believe higher borrowing costs will substantially harm local second-home purchases. "People who are sophisticated with real estate are sold on the concept of diversifying regardless of market conditions," said Linda Rheinberger, president of the Greater Las Vegas Association of Realtors and owner of One Source Realty and Management. "Investors are somewhat susceptible to rate increases. But vacation-home buyers are purchasing more for lifestyle or personal enjoyment. They don't look strictly at the numbers of the purchase." 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