Second Home First?

We’re back with an in-depth look at the ins and outs of buying a Family Getaway, your retirement home, or an investment property in a nice resort area.

You don’t many people around the United States would like to buy a second home. But they have one big issue. They don’t have their first home yet. It’s pretty understandable, because many people who live in some of the nation’s biggest cities find home prices are sky-high. I mean you can’t just reach into your pocket and pull out a couple of million dollars in New York City or San Francisco or other big dollar real estate markets. And so for many of those people especially in their younger years, the idea of owning a home of their own appears to be Out Of Reach.


But there’s an interesting development happening in super-expensive markets all across the country. In which people who are renting in the big city, and who cannot afford to buy, are hopping in their cars and driving way out into the countryside. And there a few hours from The Busy City, they are finding a country getaway, and buying that instead of a home in the middle of the city.

That’s right they’re buying their second home first.

They’re finding that the farther they get away from the middle of the city, the more affordable houses are. Just a few hours drive from New York, Los Angeles, San Francisco, Washington DC, or other big-ticket real estate markets, you will discover rural areas in which homes are extremely affordable. And that’s what many of these people are doing. They keep on renting in the middle of the city and live there during the workweek. But as soon as Friday rolls around they head out to the country to a place they can call A Home of Their Own.

And when those people by their second home first, they’re able to enjoy all the advantages of homeownership. Even in a market that’s super expensive. For instance people buying a house way out in the country can still enjoy the benefits of the mortgage interest deduction. The property tax deduction. And when they sell it, they can enjoy the capital gains exclusion. Which as you know allows you to sell your primary residence and pay no taxes on the profit as long as it’s no higher than $250,000 for an individual and $500,000 for a married couple.

The people buying their second home first are also able to enjoy growing equity. Now sure, in a rural part of the country, the value of properties will not be skyrocketing as they are in the middle of the big Urban centers. But even so overtime real estate prices tend to notch up slowly. And if you also consider that every month they pay the mortgage they will chip away at their home loan. That will grow Equity slowly at first, but over time as that loan matures, it will happen more quickly.

Some of these homeowners are using their second homes equity as an alternative savings account. And when that Equity gets large enough, they plan to sell their little Country Place and finally Buy a home right in the middle of the city. It’s a good plan, designed to help build up the big down payment Bill need to buy in the big city.

And of course the joys of owning a home of your own go well beyond the financial aspect. Because these folks who are buying homes a few hours drive outside of the big Urban centers are spending Thanksgiving there, the holiday season vacations, and hosting guests. They’re making memories, just like every homeowner does when they enjoy their lives in A Home of Their Own.

It’s a really interesting concept. And it’s really worth looking into, if you have the urge to buy a home of your own, but you’re priced out of the real estate in the city where you live and work.

Then it goes to show that for many Americans, owning a home of their own is a priority. And and if they might not be able to sleep in that home every night of the week, well at least they can every weekend.

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