It wasn’t long ago that when someone purchased a second home, it was for vacation purposes. For most second home owners in Suffolk, that meant a little place in Nags Head or Lake Gaston.

Not anymore.

With the real estate market sizzling, more and more people are buying second -even third and fourth- homes as an investment. And unlike in the past when that implied rental income, many buyers are turning around and selling the homes in a year or less and capitalizing on the skyrocketing appraisals.

On Tuesday, the National Association of Realtors reported that sales of second homes surged in 2004, and that investment property and vacation homes accounted for more than one-third of residential transactions.

An NAR study, based on two surveys, found that 23 percent of all homes purchased in 2004 were for investment, while another 13 percent were vacation homes. In addition, there was a record of 2.82 million second home sales in 2004, up 16.3 percent from 2.42 million 2003. The investment-home component rose 14.4 percent to 1.80 million sales in 2004 from 1.57 million in 2003, while vacation-home sales rose 19.8 percent to 1.02 million in 2004 from 850,000 in 2003.

While the NAR study focuses on national trends, local real estate professionals said they are seeing the same trend in Suffolk.

&uot;It’s called a non-owner occupant deal. It’s one of the few things that you can count on right now in this business,&uot; Billy Chorey, of Chorey & Associates Realty in Suffolk said. &uot;The real estate appreciation rate is phenomenal. People are buying houses for a year and turning around the selling them.

Chorey noted that he’s working with people now who want property in areas where resell is good.

&uot;They’re buying them for less than a year and making 20 or 25 percent,&uot; he said.

The New York Times reported Tuesday that many speculators are purchasing homes under construction and selling them before construction is completed and in some cases before it has even started.

&uot;Americans are treating real estate as a viable alternative to stocks and bonds,&uot; said David Lereah, chief economist at the Realtors association. &uot;And some are buying at least two properties at a time.&uot;

Grace Brown of Rose & Womble Realty in north Suffolk said she is seeing many of the same things as Chorey.

&uot;You have a lot of people out there ready to snap things up the day they go on the market,&uot; Brown said.

&uot;There are generally multiple contracts. A lot of investment properties are cash deals and you don’t have to wait on an appraisal.&uot;

Since 2000, the Times reported, the national median price of a house has increased by 33 percent. And in the fourth quarter of last year, out of 129 metropolitan areas covered by the Realtors, 62 markets showed double-digit price rises over the same period a year earlier.

Brown mentioned one home in Suffolk was purchased last April for $540,000 and was just resold for $630,000.

And it’s not just the huge homes in the newer subdivisions that are going up in price.

Chorey noted that anything in Suffolk located near Highway 58, like Kilby Shores and Oak Ridge properties, generally moves quickly because of the easy access to Norfolk, Chesapeake and Virginia Beach.

The old Suffolk market is heating up as well, Brown noted, with people finding they can purchase an older home, make some renovations, and sell it for a big profit.

Low interest rates coupled with easy financing are fueling the home buying frenzy. Mary Mills of Atlantic Bay Mortgage in Hampton Roads said she has seen about a 15 percent increase in her production of mortgage loans for investors wanting a second home.

I believe the reasons for this increase are the financial stability of our market and the increased availability of programs that fit the needs of various types of clients,&uot; Mills said.

&uot;I am referring to programs that lend an investor 100 percent financing and the numerous types of interest-only arms that allow clients more buying power. It has become much easier to lend money through both conventional and non-conventional programs.&uot;

How long can it last? Nobody knows, but the local market shows no sign of slowing down and

&uot;Investors are now seemingly buying based on the expectation that house prices are going to grow as rapidly as they have in the recent past, long into the future,&uot; Mark Zandi, the chief economist at Economy.com, a private research group, told the Times.

&uot;How quickly and high fixed mortgage rates rise will determine whether the speculative fever in the market just goes flat or whether it caves.&uot;

&uot;It’s crazy, Chorey said. &uot;I’ve never seen anything like it around here. I don’t see it how it can keep on like this.

andy.prutsok@suffolknewsherald.com