The very things that could hurt the economy will also reduce demand for second homes.
In our case, the second home is suitable as a primary residence. So, hopefully it won't fall in price like other vacation homes in a recession.
With Covid & people able to work anywhere that might be changing a bit. Our town real estate is hot right now
I think there's going to be a huge shift with remote work. White collar employees are going to move to the nicest places in the world, pushing up real estate prices there. They will be moving away from expensive cities that drew them in with short commute times. I'd rather sell my city home right now, as I expect it to drop in value in this post-COVID white-collar employment shift. The saving grace is I expect my vacation home to go up because of this, offsetting the losses when my city home goes down.
4 years ago we downsized to the vacation home. But I would not look to real estate as a nest egg. I think the stock market would have been better as an investment.
I'm only counting on my Real Estate to keep pace with inflation. The buildings may depreciate after inflation, but I'm expecting the land appreciation to counter the depreciation of buildings. (I am, however, expecting to lose money on one, and gain on the other, due to the post-covid white-collar shift.)
Which reminds me. Way way back, in my 20s, I couldn't really figure out inflation, currencies, money, investment returns, etc. Money still freaks me out a little, it's so artificial, created by governments out of thin air, based on our willingness to believe it will retain its value. Anyway, I figured I had to frame everything in terms of real assets. Shares in a company are an ownership of production capacity, and the production of goods and services has value regardless of inflation, currency, whatever. But, shares are very speculative too, and confusing, with different share classes and the proliferation of derived investment products. So, I decided to analyze everything in terms of real estate. My long term retirement plan was to have assets equivalent to the value of four houses. Why four houses? Here was the formula:
1) Define your standard of living in terms of the residence you want to live in, and the percent of your income that you want to spend on housing.
2) Add something for carrying costs (property taxes, maintenance, etc.)
In my case, my vision was, in retirement, to have 1/3 of my income going to my housing; that is, rent one of three houses to myself, rent two out to other people. Then, the rental income from the fourth house would just pay for maintenance and property taxes on all four.
I'd explain this to people and they'd try to explain that real estate is not the best investment. They couldn't understand that this was just my way of putting things completely independent of inflation, currency, dollars, return, etc. We didn't have FIRECALC back then, so the stock market was not something that could be tamed through historical analysis, at least not to my satisfaction. And, most people I talked to were almost ignoring inflation! Someone told me that the word "Real" in "Real Estate" refers to the fact that it's the only asset that isn't subject to depreciation, that it's "real" because it holds its value. (I've since learned that's not why Real Estate is called "Real".)
Anyway, I realize now we've achieved that goal that I set in my 20s. I have two houses, not four, but they are worth more than my standard of living vision. And, I have investments that could buy another. So, according to my analysis when I was 20, I could retire. But, I would need to rent out one of the houses, or, sell the city house and buy something cheaper. My analysis in my 20's didn't have us *using* more than one house, just *owning* more than one house. Hence, I can't retire.