First Person: Vacation Homes Are a Luxury We Can’t Afford

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Vacation home sales are up 10 percent, according to recent report from the National Association of Realtors cited by CNNMoney. Although I've heard a lot of real estate experts recommend people buy their retirement homes in advance, we have decided to retire in place in our Florida home. Being Florida residents, our vacation home would probably be located in a cold-weather state such as New York or Maryland. In fact, I recently looked into a real estate investment that could have become our vacation home.

Waiting for the boomer bust

The younger Baby Boomers are buying a lot of the vacation homes as well as future retirement homes. As a member of Generation X, I am confident there will be a flood of homes on the market in another 10 to 20 years as Baby Boomers move into assisted living facilities or pass away. Some echo-boomers may inherit their parents' homes, but it's also likely the homes will have gone into foreclosure. I think there will be a new real estate bust with too much inventory in another decade.

Trying to juggle two payments

Even though my grandparents owned their home outright when they retired, a lot of new retirees have mortgages. It's difficult to juggle more than one mortgage. I know a lot of seniors who are holding into their second homes until the housing market recovers. I wouldn't bank on the idea that a vacation home would go up in value with the age demographics the way they are in America. It's hard to juggle two mortgages on a fixed income.

Buying at the bottom

Even though my husband and I didn't buy our home at the bottom, we were young enough to recoup our losses on paper. We are no longer underwater on our mortgage. According to CNNMoney, the median vacation home price has risen by 24 percent to $150,000 compared to one year ago. One of my senior citizen friends was able to purchase a short sale home in Florida for $94,000 at the bottom more than a year ago. The home is now worth about $122,000. She has made it her retirement home.

While a lot of people think they can get rich in real estate, I've known very few people to succeed. For the most part, people seem to trade in one house for another, paying tens of thousands in moving and closing costs. Any "profit" they supposedly made was eaten up in mortgage interest charges and maintenance over the years. My husband and I decided we didn't want the financial and emotional burden of owning a home in another state. Even though we could hire a management company, we don't like the idea of someone else living in our future retirement home while we wait to retire. As far as a vacation home, we don't have time to even take vacations. I'm fairly certain any vacation home we owned would stay vacant as we work to save enough for retirement. Buying vacation homes may be the new normal for Baby Boomers. For Generation X, less vacation is the norm.

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