Brent Arends wrote this interesting article for WSJ.com money last week. In his article he took a very objective approach to measuring the cost and investment value of owning a second home.
Among his comments that I found useful was his commentary on how costs associated with owning a second property typically exceed the owner’s original expectations. He estimates that after-tax annual expenditures associated with owning a second home can run as high as 9% of the homes value (assuming an 80% mortgage + property taxes, etc.). This is probably a good tool for prospective second homebuyers to take into account.
However, I thought he totally missed the boat on the subjective value a family can gain by having a common place to build memories during family vacations, holiday excursions, and much more. My wife was able to spend her summers and Thanksgivings up in the San Juan Islands at a home her family has owned for years. The memories and stories she recalls are priceless.
I think it is important to conservatively calculate the financial impact owning a second home will have on a families budget but my guess is that the long-term equity appreciation and memory building will out way the costs!