According to Walter Molony, spokesman for the National Association of Realtors, the second home market is “fundamentally healthy,” despite short-term ups and downs.

The number of vacation homes sold nationwide fell 30 percent to 740,000 in 2007, from a record 1.07 million in 2006. The numbers for 2008 are not ready yet and I suspect they will be lower. But the demographics are looking pretty good for the second home segment over the next decade.

“The long-term underlying demand is favorable for vacation homes because of the large number of middle-age, middle income Americans [who are the primary buyers of such properties],” says Molony. “In recent years, this market has been driven by the baby boomers, but there are two even larger population groups coming up right behind them. Those younger segments will continue to fuel this market for the next 10 years.”

“If you have the resources and are confident about your economic future, you’re not going to find a better market than we’ve got today in terms of affordability and raw buying power,” says Molony. “It doesn’t get much better than this.”

Do you agree with the National Association of Realtors optimism about future demand for second homes?

It’s a question both second home buyers and sellers - for that matter, all buyers and sellers – are asking: Have we reached the bottom of the economic drop?

According to Moody’s Economy.com, home prices nationwide will bottom out the end of this year if the Administration’s efforts at pumping billions into the economy to stop foreclosures and unfreeze the lending markets works.

The median prices in 2008 for several (but not all) Colorado resort areas dropped between 2% and 15% (compared to an 11% drop in Metro Denver). Additionally, the volume of sales was off from 40% to 60%, depending on the town.

So what do you do? If you are looking to purchase a second home, here is an idea. Try negotiating by factoring in a discounted value for this year’s expected drop in value. That amount will vary by resort town and price point. Your Realtor should be able to give you some guidance. If it doesn’t work, go look at other properties – there are plenty available.

If you need to sell your second home, drop your intended price 5% to 10% lower than what other comparable property sales are averaging. You will attract more buyers and might even trigger a bidding war – an owner can dream, right?

What are your thoughts on the bottom of the market?