Baby Boomers and Their Second Homes

The Chicago Tribune reports:

Second homes have been soaring for the past five years, as the stock market bust gave way to a real estate boom fueled by low interest rates.

Those buying properties for personal use make up a big part of the market. But across the country, an even bigger part has consisted of those seeking an investment return.

Some highly leveraged speculators have gotten squeezed when they were unable to realize the rents needed to offset their carrying costs. Others have been luckier, buying and selling in a short order to exploit rising values.

In spots like Oceanside, Calif.; Pompano Beach, Fla.; and Beach Haven, N.J., seasonal homes have become some of the hottest commodities going. Prices have soared along both coasts, as well as in well-known ski areas and resort communities. "You see appreciation in unique areas that are simply irreplaceable," said Peiser.

In 2004, 1.8 million second homes were bought primarily for investment, according to the National Association of Realtors. That was 23 percent of all homes purchased last year.

What if the mortgage interest deduction on a second home goes away? Oh,I forgot a lot of Congressmen own second homes.