1. Vacation home sales rose 7.9% in 2009 as compared to the sharp decline of 30.8% in 2008. But at the same time, investment-home sales dropped again in 2009 by 15.9%. According to NAR Chief Economist Lawrence Yun, “The typical vacation-home buyer is making a lifestyle choice, with nine out of 10 saying they intend to use the property for vacations or as a family retreat.” This bodes well for fractional ownership as the product is typically not positioned or sold as an “investment opportunity.”
In 2009 we saw fractional sales numbers that would at first glance contradict our positive prediction for the industry; according to the latest Ragatz report, fractional sales drop by 44% from 2008. However, upon further analysis it begins to make sense as the drop is likely due to the glut of distressed whole ownership vacation homes on the market. While the mean vacation home purchase price in 2009 actually rose by an average of $19,000 to $169,000, Yun says “The higher vacation home price may reflect increased sales in higher priced markets, particularly in areas of Florida and California where prices became highly attractive for buyers over the past year.” According to the NAR, seven out of ten vacation homes purchased in 2009 were detached stand alone houses. If 70% of all vacation homes sold last year were stand alone and the average sale price was $169,000, this points to highly discounted (distressed) pricing – tough competition for fractional sales teams; even with added benefits of additional services and amenities and an exchange program.
That said, the recent increase in sales of these homes points to a positive trend if you are in the fractional ownership sales industry: distressed inventory is being cleaned up now and in 2011 and 2012, the price disparity between fractional and whole ownership vacation homes should increase.

2. Long-term demand looks favorable because there are large numbers of people in the prime years for buying a second home. Currently, 39.2 million people in the United States are ages 50 to 59 – a group that dominated sales in the first part of this decade. An additional 44.8 million people are between 40 and 49, and another 40.7 million are 30 to 39.
There is a growing population of age groups that traditionally purchase second homes, 79.9 million of them as indicated by Dr. Yun. “While economic factors can affect sales from one year to the next, the fundamental demand from these large population groups will remain,” Yun said. “Given that most people become interested in buying a second home in their 40s, the bulge of population approaching middle age should drive the second-home market over the next decade.” 

3. The current and severe economic recession has drained large portions of retirement accounts and the decline in home values leaves many with little or no equity for discretionary purchases. Therefore, practical and responsible ownership alternatives are gaining in popularity.

4. Much of the hesitation for fractional buyers has come from a simple lack of awareness. Now however, in an attempt to open up target markets and provide feasible alternatives to expensive whole ownership, larger numbers of real estate developers and hospitality brands are promoting fractional real estate products. As a result, fractional ownership is becoming more main stream to the vacation home buying audience. As more big name flags incorporate fractional ownership, the more credible and comfortable the product becomes – thus easier to buy.

5. The “Green” movement – protecting our planet has become headline news and there is now greater emphasis on the elimination of wasteful practices concerning our natural resources in addition to a growing focus of energy conservation. Fractional ownership is a very “Green” product.