One of my fantasies is to have a second home near a Vermont ski resort. As impractical as this is, I've watched the for-sale listings on Realtor.com and seen some appealing properties languish for months.

And a buddy of mine complains that he couldn't possibly sell his Vermont home for as much as he paid five or six years ago.

It seems like the real estate market has cooled - not just in Vermont but also in many parts of the country. Maybe it's turning into a buyers' market.

So is this a good time to shop for that second home you've wanted?

Perhaps - but only if you expect to keep the second home for many years and view it as an indulgence rather than an investment. The days of flipping second homes for quick profits appear to be over, for now at least.

While the median home price was 11.6 percent higher in January than a year earlier, the National Association of Realtors reported Tuesday that sales of existing homes fell 2.8 percent from December to January, the fifth straight month of falling sales. January sales were 5.2 percent below those of January 2005.

The Northeast was particularly hard hit, with sales off 10 percent from December to January and down 13.2 percent since January 2005.

While sales of single-family homes dropped only 1.5 percent from December to January, condo and co-op sales dropped a whopping 10.6 percent. Previously, this was one of the hottest markets, as buyers gobbled up second homes as investments.

The falling sales confirm stories about investment properties sitting empty while speculators who'd hoped for quick turnarounds slash prices in the absence of buyers.

Second homes and investment properties are hit hardest in a cooling market because people don't need them. Sales of primary homes are always bolstered to some extent by first-time buyers and people who for one reason or another have to move.

Anyone who's read this column for long knows that I have a glass-is-half-empty outlook on second homes. As investments, they are illiquid - you can't get your money out with the click of a mouse, as with a stock or mutual fund.
Expenses of maintaining and running a second home can be offset by renting it part of the time, but to get the biggest tax benefit on a rental you have to severely limit your own use. Also, dealing with renters can be a terrible headache - or a big expense if you hire a manager.

But what about a second home acquired primarily or exclusively for your own use?

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