Sales of investment and vacation homes jumped last year, with the combined market share rising to the highest level since 2005, according to the National Association of Realtors.

The association's 2012 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2011, shows investment-home sales surged 64.5 percent to 1.23 million last year from 749,000 in 2010.

Vacation-home sales rose 7 percent to 502,000 in 2011, up from 469,000 in the prior year.

Owner-occupied purchases, meanwhile, fell 15.5 percent, to 2.78 million.

Vacation-home sales accounted for 11 percent of all transactions last year, up from 10 percent in 2010, while the portion of investment sales jumped to 27 percent in 2011, up from 17 percent the prior year.

NAR Chief Economist Lawrence Yun says investors with cash took advantage of market conditions in 2011.

"During the past year, investors have been swooping into the market to take advantage of bargain home prices," Yun says. "Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property."

Yun says the shift in investment buyer patterns in 2011 shows the market, for the most part, is able to absorb foreclosures hitting the market.

"Small-time investors are helping the market heal since REO (bank real estate owned) inventory is not lingering for an extended period," he says. "Any government program to sell REO inventory in bulk to large institutional companies should be limited to small geographic areas. Even where alternatives are needed, it's best to rely on the expertise of local businesses, nonprofit organizations, and government."

All-cash purchases have become fairly common in the investment- and vacation-home market during recent years: 49 percent of investment buyers paid cash in 2011, as did 42 percent of vacation-home buyers. Half of all investment-home purchases in 2011 were distressed properties, as were 39 percent of vacation homes.

"Clearly, we're looking at investors with financial resources who see real estate as a good investment and who aren't hesitant to use cash," Yun says.

Of buyers who financed their purchase with a mortgage, large down payments were typical. The median down payment for both investment- and vacation-home buyers in 2011 was 27 percent.

"Given the tight credit in recent years, many would-be normal homebuyers for owner occupancy declined," Yun says.

The median investment-home price was $100,000 in 2011, up 6.4 percent from $94,000 in 2010, while the median vacation-home price was $121,300, down 19.1 percent from $150,000 in 2010.

Investment-home buyers in 2011 had a median age of 50, earned $86,100, and bought a home that was relatively close to their primary residence—a median distance of 25 miles, although 30 percent were more than 100 miles away.

"The share of investment buyers who flipped property remained low in 2011, and many of those homes likely were renovated before reselling," Yun says. Five percent of homes purchased by investment buyers last year already have been resold, up from 2 percent in 2010. The typical investment buyer plans to hold the property for a median of five years, down from 10 years for buyers in 2010.

The typical vacation-home buyer was 50 years old, had a median household income of $88,600, and purchased a property that was a median distance of 305 miles from a primary residence; 35 percent of vacation homes were within 100 miles and 37 percent were more than 500 miles away. Buyers plan to own their recreational property for a median of 10 years.

Lifestyle factors have consistently been the primary motivation for vacation-home buyers, while the desire for rental income drives investment purchases. Vacation homes bought last year were more likely to be in suburban or rural areas; investment homes were concentrated in suburban locations.

Eighty-two percent of vacation-home buyers said the primary reason for buying was to use the property themselves for vacations, or as a family retreat. Thirty percent plan to use the property as a primary residence in the future, and only 22 percent plan to rent to others.

Half of investment buyers said they purchased primarily to generate rental income, and 34 percent wanted to diversify their investments or saw a good investment opportunity.

Sixteen percent of vacation buyers and 14 percent of investment buyers bought the property for a family member, friend, or relative to use. In many cases, the home is intended for a son or daughter to use while attending school.

Forty-two percent of vacation homes purchased last year were in the South, 30 percent in the West, 15 percent in the Northeast, and 12 percent in the Midwest; 1 percent were located outside of the U.S.

Forty-four percent of investment properties were in the South, 23 percent in the West, 17 percent in the Midwest, and 15 percent in the Northeast.

Eight out of 10 second-home buyers said it was a good time to buy. Nearly half of investment buyers said they were likely to buy another property within two years, as did one-third of vacation-home buyers.

Currently, 42.1 million people in the U.S. are ages 50 to 59, a group that has dominated second-home sales since the middle part of the past decade. An additional 43.5 million people are 40 to 49 years old, while another 40.2 million are 30 to 39.

"Given that the number of people who are in their 40s is somewhat larger than the 50-somethings, the long-term demographic demand for purchasing vacation homes is favorable because these younger households are likely to enter the market as their desire for these kinds of properties grows, and individual circumstances allow," Yun says.

NAR's analysis of U.S. Census Bureau data shows there are 8 million vacation homes and 42.8 million investment units in the U.S., compared with 75.3 million owner-occupied homes.