Can You Still Afford a Second Home?

I had a call over the weekend from a salesman promoting vacation homes in Costa Rica. As I looked out my windows at our gorgeous autumn colors in Santa Clara Valley, I answered with a quick, "not interested."
But Tom Kelly, who writes a column on second homes says that while the subprime market crisis is affecting credit markets around the world, baby boomers and retirees can still find funding for their second homes, especially in countries with a stable political environment and solid infrastructure.
Latin America developers are targeting the 79 million baby boomers in North America -- the largest, healthiest and wealthiest group ever seen on the growth landscape. According to statistics compiled by the U.S. Census Bureau and Federal Reserve, this group controls 67 percent of the country's wealth, or $28 trillion, and households by someone in the 55-to-64 age group had a median net worth of $112,048 -- 15 times the $7,240 reported for the under-35 age group.
According to experts gathered for the recent Latin America Real Estate Conference, the desire to seek vacation and second homes abroad has just begun, even though some potential buyers are stymied by the flat or dwindling values of their primary home.
Dr. Stephen Roulac, an investment advisor in southern California, stated that
"Most of the people who can afford a second home outside the United States are either going to be paying cash or have a variety of places they can get funding. The subprime situation is not a factor for these people."
But some Realtors who specialize in Latin American sales, are seeing ballooning inventories, and potential home buyers taking a "wait and see" position.
My friend and fellow Realtor, Suzanne, came close to buying and renovating a property in Rosarita Beach, Mexico a couple of years ago. The sale didn't happen, because of difficulties in dealing with local contractors, and now she's hearing about an inventory glut in the Rosarita-Ensenada corridor south of San Diego that will have to be absorbed by long-term investors.