Second homes: households' life dream or (wrong) investment?

While the purchase of a primary home is mainly motivated by essential consumption needs, buying a second house has been generally considered a good investment decision. However, second homes may results in many different final uses, ranging from holidays and profitable uses to definitely unprofitable ones. We contribute to the scant literature on second houses by exploring the case of second homes that remain unrented and represent the most notable unprofitable use. The empirical investigation relies on the 2002-2012 Bank of Italy Survey on Household Income and Wealth which, among other things, provides plenty of information on real estates, including the actual use. Our results on the unprofitable use of second homes highlight: a gender gap, whereby this case tends to be more clearly associated with male decision makers; no association with household’s economic characteristics; and, strong association with the specific real estate features, with inherited dwellings more likely to end up being unprofitably used. Thus our results, besides casting some doubts on the goodness of second homes as an investment decision, may have important policy implications on the housing and rental market and call for policy or regulatory interventions.