Does Second-Home Ownership Affect Primary Housing Demand?

Using American Housing Survey (AHS) data, this empirical paper suggests that if someone already has a second home, it may not affect their decision about the price of a new primary home, and they will not be likely to choose a cheaper one than their counterpart without a second home. This runs counter to the implicit suggestion of a previous study that second-home ownership may reduce the demand for primary housing. Many baby boomers have second homes and they have not yet locked up their current primary housing as the final home of their lifetime and may even trade up before they trade down. At present, except for continuous immigration, few other factors point toward growth in housing demand. Thus the finding here can be seen as good news for the housing market when it eventually recovers from its current downturn and crisis in mortgage lending.