By John Garrett I have fielded many calls lately from investors asking me if prices have dropped at the Lake of the Ozarks, or to give them a call this winter when prices start to fall. In my opinion, it isn’t going to happen anytime soon to this market for a few very important reasons. First, the strong demographic demand from baby boomers. They have the desire to purchase vacation homes and investment properties, and a desire to diversify portfolio assets into more secure investments. In fact, diversification of portfolio investments is a significant motivation for purchasing a second home, cited by 35 percent of investment buyers and 28 percent of vacation-home buyers. Of vacation home buyers, 21 percent said it would be their primary residence after retirement, compared with only 2 percent of investment buyers. These boomers are smart enough to realize the prices should only get higher and higher the next few years, and buying the retirement home at the Lake of the Ozarks now will be a smart move. Although earlier sales data is not directly comparable because second-home buyers were under-represented in previous surveys, sales have trended up since 1997. The increase in second-home sales coincides with tax-law changes that went into effect in 1998. The tax change essentially did away with the capital gains tax for most buyers wishing to trade down to a smaller primary residence and use some of their equity to purchase a second home. In searching for a second home, 83 percent of buyers used real estate agents. The typical buyer searched seven weeks to find their second home and looked at six properties. Eighty-three percent financed with a mortgage and made a median down payment of 22 percent. Although 45 percent used savings for a down payment, 29 percent used equity from a previous home. Vacation homes can be found in every state, with the most popular locations by the water or in the mountains. Most buyers prefer locations that are within an easy drive. Vacation-home buyers want their property for their own exclusive use, with three-quarters saying they never rent their properties. Vacation-home owners prefer to be close to where they spend recreational time or to natural attractions. As for activities of interest, 37 percent of recent buyers enjoy beach, lake or water sports; 29 percent are interested in golf; 18 percent theme parks; 16 percent winter recreation; 12 percent hunting or fishing; and 9 percent boating. The Lake of the Ozarks is well positioned to capitalize on these wishes. The study shows the vacation homes of recent buyers are located relatively close to the owners primary residence, with a median distance of 197 miles. However, the distance varies widely, with 43 percent more than 500 miles and 47 percent less than 100 miles. Given the Lake of the Ozarks location and proximity to St. Louis and Kansas City, this bodes well for the future of real estate at the Lake of the Ozarks. Second, the replacement cost of these homes has risen significantly, but the replacement cost of waterfront lots has seen a astronomical rise in value. From 2005 to YTD 2006, waterfront lots have increased in price per front linear foot on the Lake by 63%! That is 63%! Even if you are buying a condo or townhome, you can rest assured that with lot prices increasing by 63% and construction material increasing by 10.33% , your values look very secure. In fact, they look like they will be going up until the baby boomer buyers stop wanting Lake of the Ozarks real estate. John Garrett View my web site

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