Personal wealth
By mike Richwine 10/20/2025
As someone who has spent a lifetime in real estate, I’m continually amazed by the sheer wealth evident in the U.S. vacation home market. Who owns these homes, and where does their wealth come from?
First as a banker, mortgage banker, national retail property expert, I’ve completed over 300 transactions and sold or financed over $6 billion worth of properties. How come I don’t own one? Yes, I’m jealous, but what is new about that?
Being a curious sort all my life, my first search into this started over 50 years ago when as a young couple we joined friends on a ski trip to Vail. My research at that time showed that the largest segment of buyers came from high-cost big cities like Dallas/Houston/LA/New York/Boston. Surprisingly, my companies’ demographic reports showed Vail’s SIC code (standard industrial classification), came out to be auto dealers! At that time, if you think about it, there was an auto dealer in every city in the US. There were about 25,000 dealerships, and they were all successful[1]. If you had an auto dealership in Des Moines, where do you spend your money without being ostentatious (showing off your wealth in those days was considered gauche unlike today’s garish shows of wealth). You bought a vacation home and entertained your clients (high tax rates at the time were often offset by very lenient business tax write-offs) – not so much today.
Now, fifty years later, I am shocked by the number of vacation homes across the US that are $2,000,000 and up. Kiawah Island, SC, for instance has over 800 vacation homes at or above that price. A friend bought a home there for $1,350,000 in 2011. This 3,500 sf home was built and sold for $400,000 in 2004, and now has a market value of $2,800,000, according to Zillow.
About a year ago, I was hearing about this new thing – artificial intelligence – “golly” I said to myself I should investigate this new-fangled thing! Being in my late 70’s, learning new things come a little harder for me, but I gave it a try. My uses, at that time, for ® CHAT GPT were limited as I do not intend to complete thesis or scholarly works, but to find out answers to my curiosities. I did not even know what to ask, What a rabbit hole! I took a “certification” class online at Coursiv but still am overwhelmed. What I can use it for is research, as I have done for this article.
Where has all this wealth come from to buy all these vacation homes? – I asked. “The answer is not readily available” was the non-answer from Chat. How do people amass wealth to buy these homes – the answer was “it’s complicated”
Here is a synopsis:
It is estimated that leisure home buyers make up to 3.43% of all buyers and 12-19%of values in leisure zip codes.
- How many leisure luxury homes are there~200,000 to 400,000 U.S. vacation/second homes valued at $2,000,000 or more.
- How many second homes exist? Roughly 7–6.5 million U.S. homes are used as second/vacation homes (2022–2023 estimates).
- How pricey are second homes vs primary homes? The median second-home value was ~$495k in 2024, higher than primary homes (~$385k), i.e., the distribution skews “richer” in vacation stock.
- How rare are very expensive homes nationally? As context, 5% of all U.S. homes are worth ≥$1M. Separately, Realtor.com pegs the “high-end luxury” cutoff (top 5% of listings) at about $2M in 2025—so ~$2M corresponds to roughly the 95th percentile price tier in listing data. (Listings aren’t the same as the entire housing stock, but it’s a useful benchmark).
Where does this wealth come from?
- Business ownership / private enterprises — especially in auto dealerships, healthcare groups, law/accounting firms, and regional manufacturing or distribution.
- Corporate liquidity events — stock-option exercises, mergers, and buyouts during 1990s–2020s booms.
- Equity-market gains — portfolios compounding over decades. The current Stock market explosion certainly adds a feeling of wealth.
- Inheritance & intergenerational transfer — major role post-2020 as Boomers pass on wealth.
- Tax arbitrage & relocation — selling a high-tax-state property, buying luxury real estate in a low-tax state for residency benefits.
- Long term corporate employment – anecdotally, I have many friends who were in upper level- not top- that have amassed stock and bonuses, corporate life insurance, and other things like options, that do not show up in annual income.
Understanding inheritance’s affect intrigued me. As the first Baby Boomer, born August of ’46, I was born to paents who were solidly lower-middle class, but worked their way up and not much was inherited. However my real estate career was inter-twined with the growing Life insurance companies which at that time were the only sources of long term debt for commercial properties.- I was a loan correspondent for Mass Mutual life, Met Life, New York Life etc. and was very familiar with this rapidly growing pool of money. However, using trusty AI, research shows this graph of payouts:
“quiet” wealth source feeding today’s market
According to the Insurance Information Institute (III), life insurance benefits and claims (i.e. total payouts, not just death benefits) in the U.S. in 2024 were about $965.6 billion. (just 35 Billion short of a Trillion dollars! – that is a lot of annual income)!
- Number of Policies Paid Out:
- 7 to 3.1 million individual claims annually, based on data from ACLI (American Council of Life Insurers).
- Average Payout per Claim:
- Estimate: Between $225,000 and $260,000, depending on whether group policies and annuities are included.
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- Term Life policies often pay out around $160,000 to $180,000.
- Whole Life or Permanent policies are generally higher
- Primary Beneficiaries are often
- Spouses: ages 55–70
- Adult Children: ages 30–50
- Dependent Minors: Trusts often hold policies if children are under 18. Policyholders at time of claim:
- Median death age: 72–78 years old, depending on policy type
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- Term life: often earlier claims (60s–70s)
- Whole life: later (70s–80s)
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If only 2% of the payouts were over $1,000,000, that would mean over 60,000 citizens were millionaire beneficiaries! Certainly better than the Lotto! Imagine – 60,000 different citizens per year receiving one million dollars or more in life proceeds! To me that is mind boggling!
I asked ChatGPT if there were any articles – “I did a search, and while I didn’t immediately find a recent major article explicitly arguing that current life insurance payouts are acting as a strong macro-economic stimulus.” Why- “insurance proceeds are private information, and not reported to any Government agencies individually”
Life insurers’ contract payments (life, annuity, disability) must have macro-effects, e.g., helping consumer spending, reducing social program burden, and supplying capital to markets, but are not followed by major media!
The payouts are not normally taxable. The IRS excludes life insurance death benefits from taxable income. If you were the average 50–70-year-old and received this “windfall”, where would you invest it? Second home – good enough answer for me!
In 2024, life insurance and related benefits paid out roughly $965 billion. That’s more than the entire U.S. defense/national security budget that year. It’s enough to buy over 2.4 million homes at $400,000 apiece, or nearly 10 million luxury electric cars. You could fund 38 years of NASA’s annual budget or build hundreds of NFL stadiums. In sheer scale, that sum is so enormous it’s almost unimaginable — yet it reflects real funds flowing into dozens or hundreds of thousands of households, reinjected into the economy in one way or another.
Just as auto dealers once filled Vail’s chalets, I suspect today’s beneficiaries of quiet inheritances and insurance windfalls are filling the luxury listings across America’s coasts and mountains.
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Word count 1320
[1] . The number of car dealerships in the US peaked in 1927 at 53,125 and steadily decreased over the next decades. By 1960, there were 33, 658 dealerships; by 1980, 23,379; and by 2001, 22,007.[1] according to Wikipedia.
