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How many times have you picked up a real estate guide while on vacation, flipped through the pages of dream homes, and thought, what if? A growing number of people are turning their fantasy into reality. Sales of vacation homes in the U.S. jumped 17 percent last year to a record 1 million, according to the National Association of Realtors (NAR).

Demographics are a major factor driving interest in the second-home market, says NAR spokesman Walter Molony. Baby boomers, the 78 million–strong generation that has redefined every stage of life it has encountered, are now in their peak earning years and have the disposable income to splurge on a vacation home. “It’s a lifestyle choice,” says Molony. “They’re not doing it for investment purposes but for their own personal use.” With the oldest boomers turning 60 this year, some are looking ahead too. According to the NAR, 18 percent of buyers plan to make their getaway home their primary residence in retirement.

The hot second-home market also owes thanks to a late-1990s change in the tax code. Under the old law, the only way to avoid capital gains taxes when selling a primary residence was to buy a costlier one. Today, a couple that meets IRS requirements can pocket up to $500,000 tax free from the sale of their home, letting them downsize to a smaller, less expensive place and use some of the leftover proceeds for a vacation retreat. In 2004, 22 percent of vacation home buyers paid in cash.

Just what they are paying for varies, depending on whom you ask. Thirty-four percent of buyers choose a place that’s less than 100 miles away from their primary home, while another 34 percent go 500 miles or more to escape. Two-thirds want to be close to water, and 31 percent prefer the mountains. Whatever the draw, the NAR expects vacation home sales to remain strong as more people enter the prime years for buying one. Here are five hot regions that are attracting attention.

Ask Richard Lee, vice president of First American Title Company in Nevada, about the future of Las Vegas and he’ll tell you about the cranes. Today, Lee counts 40 high-rise construction cranes in the Las Vegas skyline, representing $20 billion worth of gaming and hotel projects that are due to finish in the next five years. He contrasts that with the period from 1990 to 2005. During those years, developers poured $15 billion into flashy new casinos and five-star luxury hotels — a boom era in its own right. “Everybody wants to come to Vegas,” Lee says. “The money is chasing that phenomenon.”

And, of course, a common phenomenon in Vegas is chasing the money. Last year, a record-breaking 39 million tourists visited the desert oasis, injecting $37 billion into the local economy. But the lure of Sin City extends beyond poker tournaments and round-the-clock roulette. Las Vegas is a ritzy playground for adults, with gourmet dining, world-class shopping, nightclubs, and top-flight entertainment. Dozens of shows are on tap every night, from concerts by marquee performers including Celine Dion and Barry Manilow to award-winning Broadway productions like The Phantom of the Opera, which opened last month. And while you can still find Vegas’ famous all-you-can-eat buffets, restaurants operated by nationally recognized chefs, like Bobby Flay’s Mesa Grill at Caesars Palace, promise dining at its best.

For luxury condo dwellers living along the Strip, the neon-popping night view can be entertainment in itself. “The Strip is our ocean,” says Lee. “An ocean goes dark at night, but the Vegas ocean turns into the most electrifying thing on the planet.”

You’ll have to win more than a few hands of blackjack to afford such glamorous views. For example, a fully furnished penthouse at Trump Tower on the Strip is going for $2,323.33 per square foot, according to Carol Mitchell of Realty Executives in Las Vegas. Properties off the Strip are usually less expensive, and the number of single-family homes and condos for sale is rising, says Mitchell. Even off the Strip, however, celebrity is still very much part of Vegas culture. Lee recently spotted Dion and her husband strolling hand-in-hand at a local shopping mall. “The stars are back in Vegas,” he says. “People are attracted to that.”

In the Valley of the Sun, golf goes with everything. There are “nine and wine” events where golfers play nine holes, then mingle with friends at the clubhouse. Local spas offer golf facials to combat the effects of sun exposure on the green and massages to get the kinks out after a challenging game. One resort offers parent-and-child golf outings, complete with chocolate milk stocked in the cart, while another lets golfers zip around its course on Segway Golf Transporters. “Golf drives tourism here,” says Lynn Cannon, consulting administrator for the Golf Industry Association of Arizona, which estimates that the sport contributes $3.4 billion to the state’s economy every year.

Golf drives real estate as well. According to Cannon, the majority of new courses being built in Arizona are connected with residential communities. Some of the courses feature classic, tree-lined layouts with wide expanses of turf, while others take a more back-to-nature approach, with narrow ribbons of green bordered by desert vegetation. Golf communities tend to attract well-heeled retirees and others relocating to the region to take advantage of the robust job market, notes Kent Gagon of First USA Realty. In the past five years, Maricopa County, which includes Scottsdale and Phoenix, has seen its population swell by 563,000, to 3.6 million — the largest increase of any county in the country. The median price of a single-family home has gone up 62 percent, from $153,000 in 2003 to $247,000 last year, and the region’s strong economy promises further upside.

Despite the steep appreciation, Gagon says the area remains affordable, especially to second-home buyers coming from California and other pricey markets. Luxury condos under development in downtown Phoenix and Scottsdale offer easy access to restaurants, nightlife, shopping centers, and cultural events. Art fairs, culinary festivals, and sporting events make for active weekends throughout the year.

Comparing handicaps may be the area pastime, but with 330 days of sunshine every year, locals have found other outdoor activities to enjoy in addition to golf. “Most people think of Arizona as flat, but we’re actually surrounded by mountains with great hiking,” Gagon says. Several large lakes in the region also offer aquatic sports like boating, fishing, even scuba diving lessons. Who knows? Maybe underwater links will be the next big thing in golf-crazy Arizona.

Jackie Gleason was on to something when he moved his TV show to Miami Beach in 1964 and dubbed the area the “sun and fun capital of the world.” Fast-forward more than 40 years, and South Florida still grooves to a beach party vibe. Sunset sailing and alfresco dining at restaurants along inland waterways are part of the lifestyle in this subtropical resort area. “Florida used to be seen as a retirement place, but today it’s an all-family area,” says Allen Rosenthal, a realtor with Coldwell Banker in Coral Springs, Fla. “There’s a broad range of buyers, from people in their twenties to their seventies.”

Indeed, South Florida has seen explosive growth in recent years, thanks to its strong economy and natural beauty. The population of Broward County, home to Fort Lauderdale and other beach communities, rose 40 percent between 1990 and 2004, to 1.7 million. Towers of luxury condos have sprouted along the coastline, and the median price of a single-family home in the greater Miami–Fort Lauderdale area hit $371,000 last year, up 60 percent in just two years. With little space left for new construction, the region is now converting existing rental apartments and hotels into condos for vacation home buyers and investors.

A watery blue pervades daily life here. Greater Fort Lauderdale berths an estimated 42,000 resident yachts (plus countless more that come to visit). At twilight, gondolas glide along the city’s waterways, carrying couples enjoying the romantic ambience. Adventure seekers kayak through the mangrove forests of the Wilderness Waterway in Everglades National Park. The waterway stretches 99 miles around countless islands, and visitors can spend the night in the park on raised-platform campsites accessible only by water.

South Florida’s cultural scene reflects the diversity of its people. Festivals throughout the year celebrate the traditions of Latin America and the Caribbean, and local nightclubs satisfy every musical taste, from jazz to salsa, hip-hop to rock. The Broward Center for the Performing Arts in Fort Lauderdale showcases a range that includes modern dance, classical music, drama, and family-friendly fare like circuses and magic acts. The Miami Performing Arts Center, a $446 million project in downtown Miami, will further expand the region’s entertainment options when it opens later this year, creating yet more fun to go with the abundant sun.

Maybe it’s the intoxicating jasmine trees, or the mesmerizing blue waters that stretch to the horizon. Whatever the reason, life in the Caribbean moves at a pace that has nothing in common with BlackBerrys, instant messaging, or 24-hour delivery service. “You can’t come here with an attitude that you’re going to get anything done quickly,” laughs Karen Warhol, a realtor with John Foster Real Estate in St. Thomas who moved to the island 15 years ago from New York City.

The laid-back lifestyle affords plenty of time to enjoy the scenic beauty of the region. Coral reefs and underwater caves await scuba divers and snorkelers, while lush natural habitats provide ample adventure for hikers. The sweeping white-sand beaches are perfect for long, quiet walks, but if you’re in the mood for some island tunes, the sounds of calypso and the steel drum are never far away. Regattas attract crowds of sailing enthusiasts each year, and cultural fairs abound. One of the largest is the Emancipation Festival on Tortola, the island capital of the British Virgin Islands. The festival, held each August, celebrates the abolition of slavery in the British West Indies with colorful parades, dancing, and countless food stalls selling local delicacies like conch fritters and fresh lobster.

Limited development has led to rising real estate prices in the Caribbean. A one-bedroom condo overlooking the water in St. Thomas might sell for as much as $300,000 today, compared with $60,000 four or five years ago, says Warhol. Many buyers use their homes a few weeks a year and rent them out the rest of the time. The area is attracting more vacation home owners now that it has regular air service, improved public utilities, and other creature comforts.

What really sets the Caribbean apart is the warm, friendly nature of its people, according to Patty Birch, a realtor with Morley Realty in Nassau, Bahamas. On the Out Islands, she says, everyone is on a first-name basis, native and newcomer alike. The weekly arrival of the mail boat carrying supplies from Nassau is a social event, with residents gathering at the dock to pick up their mail and shoot the breeze with friends. Many second-home owners in the Bahamas volunteer at local schools or find other ways to contribute to the community. “They give back, whether it’s through their time, money, or resources,” Birch says. “That helps the islands more than just building a house.”

There are two types of people in Galveston, Texas, says Marsh Davis, executive director of the Galveston Historical Foundation: those who are BOI, or born on the island, and those who are IBC, islander by choice. Davis is an IBC, having moved to the city four years ago, but he says the locals have embraced him as one of their own. “There’s a welcoming spirit to Galveston,” he says. “Everywhere you go, there are people you know.”

Located 50 miles south of Houston, Galveston was the main commercial hub of Texas in the 1800s, mainly due to its Gulf Coast ports. Its deep historical roots, evident in the grand 19th-century Victorian homes that line the streets of the East End district, make the city of 60,000 unique among beachfront communities. Dickens on the Strand, a 30-year tradition each December, transforms the historic downtown Strand district into a Victorian holiday fair, complete with bagpipers, horse-drawn carriages, residents dressed in period garb, and artificial snow. The island’s quaint charm and outstanding waterfront views are drawing many newcomers looking for weekend homes, notes Marilyn Winters, a broker with Galveston County Realtors GMAC who says about 80 percent of her clients are from Houston. Prices, in turn, have crept up. In 2000, 19 percent of homes sold in the Galveston area went for $200,000 or more. Last year, that figure was up to 37 percent.

Buyers are also flocking to South Padre Island, about 400 miles southwest of Galveston. First-quarter sales this year were up 30 percent from the same period in 2005, according to local broker Alice Donahue. Pristine beaches, crystal-blue water, and a range of aquatic sports are top attractions. Kiteboarders and windsurfers migrate to the shallow waters of the Laguna Madre on the island’s bay side, while anglers in the Gulf fill their boats with red snapper, tarpon, and other local catch. Mexico’s bustling outdoor markets are just 20 minutes away and make a fun destination for day trips.

For easy mainland living, Texas style, look no further than the Hill Country, a vast area of 14,000 square miles easily accessible from Austin and San Antonio. Wineries dot the landscape, as do wildflower trails that burst into color in spring. In the town of Bandera, which bills itself as the cowboy capital of the world, you can take in a rodeo and then ride off into the Texas sunset, just like the cowboys do in the movies.

— Jennifer Gill

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Photographs by: Diana Hoff/Getty Images (Second Home); Bob Krist/Corbis (Las Vegas); Sean Justice/Getty Images (Phoenix/Scottsdale); Lester Lefkowitz/Getty Images (South Florida); Anna Grossman/Getty Images (Caribbean); Wes Thompson/Corbis (South Texas)

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