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Where Do You Summer? Verbs From Another Planet

I don't understand much about economics--I took the one intro course in 11th grade with Mr. Alexander and that wrapped it up for me--but I love reading those pieces in the business section that let you compare your own miserable finances to the gloom and doom facing the rest of the population.

Sunday's package in the Post by Neil Irwin was your basic oh-my-God-we're-all-going-to-be-eating-cat-food-when-we're-old fright piece, but with bonus stats that frankly floored me. (Excellent graphic is in the dead trees edition only, not on the big web site, but the stats on which it's based are available here.)

So I look over at the state of upper income Americans--defined as households with median income of $104,700, which in the Washington suburbs is pretty darn close to the median income of everybody--and check this out: 19 percent of those folks own a second home. So do 16 percent of the mid-career category of Americans, whose median income is $61,100.

This is nothing short of astonishing to me because I have exactly zero friends who own a summer home. This is hardly worth shedding tears over. I can't imagine most people I know having time to spend at a second home, let alone take on the task of owning and maintaining one. So I need to know: Who are these people, and where do they find the resources to own a summer house, and how do they get the time to go to it?

My parents and many of their friends were teachers, and somehow a fair number of them managed to acquire summer places. But that was a different economic era, a time when the gap between rich and everyone else was not nearly as terrifying, and a time when everything seemed much more affordable.

Now I know plenty of people who have surpassed their parents' earning power, in some cases moving into another social class entirely--at least statistically--yet these people could no sooner afford a summer house than they might a Rolls or a private jet.

But this study in American Demographics argues that second home ownership will increase considerably in the years to come, in part because household size is shrinking even as household income rises.

Still, I don't get it: How does all that square with all the stories we read about how Americans aren't saving, have no pensions, and face retirements as paupers?

Part of the answer is empty-nesters and people who never had kids. Obviously they have lots more disposable income than families with children. But that can't account for such an enormous number of second-homeowners. Surely some of you--including you second-homeowners--can explain this.

By Marc Fisher |  March 8, 2006; 2:15 PM ET
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People that own 2nd homes don't actually use them personally. They rent them out to people like us who want a week at the Outer Banks each year. They hope to break even each year on rental income, and then cash out on the equity in the future.

Posted by: COD | March 8, 2006 3:00 PM

Agree with the previous poster. I owned 2 homes at one point - a condo that I used as rental property and a house that I lived in.

Posted by: meg | March 8, 2006 3:07 PM

One can get a deduction on a second home. (Interest on up to $1.1 million of debt secured by your first and second homes can be deducted. From Yahoo Finance.) Which is well in line with the zero savings rate of our nation. The savings rate reflects neither home buying nor home repair, which is logical if one thinks that those costs may not be recouped (if there is a "bubble").

Posted by: S.L.B. | March 8, 2006 3:09 PM

We own a second home in Lewes, DE. We use it on weekends and will be renting it out during the summer, hopefully.

Eventually, it will become our permanent home when we retire. We'll sell our home in Easton and pay off the second home. This is the third time we have had a second home. One in Cape Cod, which we sold, and one in Easton, MD which we rent out.

It can be done and we don't make much money at all.

Posted by: Maureen | March 8, 2006 3:41 PM

Did I miss something or did the item about the City managing some degree of WiFi broadband access disappear?

I found it thought-provoking...


Re. second homes: I don't have a second home, but I do have a couple of tents for summer camping trips.

Achenbach and Steuver will probably laugh at that last, though neither will be surprised. Hank will be amused to learn that we put some nice blue tarp on the ground where the tent's going to go. Helps keep moisture from seeping out of the ground into the tent.


Posted by: bc | March 8, 2006 3:55 PM

I'm not sure a second home automatically equates to a summer home. Lots of people have invested in real estate over the past decade, and many of those second homes may be employed as rentals.

Posted by: Mark | March 8, 2006 4:17 PM

Whoops, lots of people already pointed that out.

Posted by: Mark | March 8, 2006 4:18 PM

Eagle-eyed bc caught the temporary substitution of an item here on the big blog. Not to worry--it'll be back on in a matter of hours. Just a timing issue, juggling some topics here. Thanks for noticing.

Posted by: Fisher | March 8, 2006 4:30 PM

Marc - My parents own a summer house. It originally belonged to my Grandfather. Did you ever see "The Seven Year Itch"? Before air conditioning, mommies and kiddies left the city - any city - for the cooler countryside for the whole summer. Back in my Granddad's day, you rented an appt in the city but bought a house in the country. Now my parents own the house. But what about when they're gone? We children will have to sell it because none of us can afford a 2nd home, and we're only talking taxes, utilities, and basic upkeep. The house itself is gigantic if not very modern, but the land is now worth gazillions. We're gonna have to trade in all our childhood memories for the cash.

Posted by: Summerer | March 8, 2006 4:50 PM

Sorry Marc, this conversation is too rich for my blood....

Posted by: Frankey | March 8, 2006 4:55 PM


Did you mean to say "mid-career category" above, or were you referring to something about income?

Posted by: THS | March 8, 2006 7:27 PM

Not being one of the second-home owners, I can't say for sure, but I have to think that the growth of second-home ownership has something to do with the tremendous increase in home values in this area. People may be taking equity out of their first homes to buy another. I, too, wonder, though, how people have the time and energy to maintain two houses. Unless you have, in addition to the money to buy it, the money to pay someone to do almost everything involved in maintenance, I can't imagine. Merely getting ready and getting out the door for the weekend---especially for families with children---is a lot of work, and then there's the traffic. Hard to imagine spending the weekend maintaining property for renters too, but your colleague Steve Hendrix seems to be enjoying this kind of life. Different strokes, I guess.

Posted by: THS | March 8, 2006 7:33 PM

Yes, THS, I meant mid-career; the survey looked at folks in the 45-54 age range. The average income in that age range was $61,100.

Posted by: Fisher | March 8, 2006 7:56 PM

I make a heck of a lot more than 61k and I cant afford a single home, much less 2.

What is happening is that these people are gambling with the market being hot right now. These people dont fear debt or credit. But, as with any credit, at some point it has to be paid.

There is no way making 61k that someone can in reality afford 2 homes. People that think that this is possible is just seriously delusional.

This hot housing market is making ALOT of paper rich people out there, just like it did in the stock market in the 90's. The only difference with the housing paper richies, for the worse, is that people will still have a mortgage to pay on a home that when the values fall and they cant sell. (due to the insane amount of supply the builders are building right now).

Personally, I can't wait.

Posted by: kme | March 8, 2006 8:17 PM

I'm glad there wasn't anything nefarious behind 'The Case of the Disappearing WiFi Item'.

I wouldn't want another home without a big increase in income (unlikely considering that I spend too much time on the 'net).

One house is a big enough pain in the tuchis, why do I need two?


Posted by: bc | March 8, 2006 9:41 PM

Marc, Go to South Florida. The coasts and golf courses are filled with condos owned by people in the north who go there for the winter.

Posted by: Barry | March 9, 2006 5:25 PM

We own a couple of acres on a mountain in a state to the west of the DC metro area.

Principal and interest, the property ended up costing about $10 K to purchase. When we resell it, as we hope to do very soon, we'll get back about $6K, if we're lucky.

Great deal, huh?

Never built anything on it but a deck to support a tent. So that could be why it hasn't appreciated. Oh and the fact that it's nowhere near anyplace anyone wants to be.

But we may get a second home if we come into inheritence money. That depends, of course, upon our parents not spending it all before they die or willing it to some foundation or cause. And Dad could always marry some 20-year old gold-digger too....and SHE'll get the house.

Posted by: sd in md | March 9, 2006 6:03 PM

My in-laws own a second home. it's enormous, inconveniently located, but extremely beautiful. It's in use for about 8 weeks of the year. Doesn't seem worth the upkeep, and as the relatives get older, they will be less able to get there. They think it's a great thing for their kids, but they pay someone 10-20 hours a week to maintain it, and we will never be able to keep it up on our own, even with decent salaries. Think of all the vacations you could take with that maintenance money. Add taxes, flights and car rentals back and forth... a summer home just isn't worth it. I'll be happy when I can just upgrade to own a home that is larger than my current shoebox!

Posted by: mcm | March 10, 2006 4:03 PM

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