Patricia and George Riddiford sold their vacation home last month for $925,000, reaping a 28 percent profit on the golf-resort property near Las Vegas they bought in 2002.

"For us, it was an alternative to investing in the stock market and, at the same time, it gave us a quiet and protected place to get away to," said Patricia Riddiford, 55, a homemaker whose husband runs a roofing company.

Now, the Riddifords, who live in Chicago, are building again, on a $570,000 half-acre lot in the same Nevada resort. They're among the baby boomers in their peak earning years who are igniting demand for second homes near beaches, lakes, ski resorts and golf courses. A record 445,000 vacation homes were sold in 2003, a 24 percent gain from 2001, according to the National Association of Realtors.

As demand rises, prices for vacation homes probably will increase at a pace more than double the 6.7 percent forecast for the overall residential market in 2004, said David A. Lereah, the NAR's chief economist.

"It's all demographics," said Lereah, 51. "We're seeing the baby boomers nearing retirement age, and we're seeing real estate play a more prominent role in their investment planning because of their memories of the stock market declines."

The leading edge of the baby boomers, the 29 percent of the U.S. population born from 1946 to 1964, turns 58 this year. That means the heightened demand for vacation and retirement homes probably will last for at least the next decade, Lereah said.

Boyd and Sandi Montgomery of Sylvania, Ohio, are buying a two-bedroom ranch for $285,000 at the Sun City Grand development in Surprise, Arizona. When he toured the development just outside of Phoenix, Boyd, 58, an insurance salesman, said he saw residents enjoying such things as woodworking and roller skating.

"I guess you could say it's a little bit like camp for grown-ups," he said. "I'm looking forward to meeting new people and having fun."

He said he plans to start a "vintage baseball" team at the development's softball stadium. In Ohio, he's a second baseman, playing according to the rules of 1860, without a glove.

The Montgomerys, who said they'll use the home for vacations and, eventually, retirement, visited Florida, Texas and Arizona before settling on Sun City Grand. The development, built by Pulte Homes Inc.'s Del Webb subsidiary, the largest U.S. builder of retirement communities, is an "age restricted" community where buyers have to be 55 or older.

This year, 3.5 million baby boomers will turn 55, and 32 million more will turn 55 in the next eight years, a report by the Washington-based National Association of Home Builders said.

Pulte Homes will probably gain from the second-home trend. Del Webb focuses on what it calls "active adults," those 50 to 70 years old. Pulte's stock price has increased 75 percent in the past year. Golf course designers such as Montclair, N.J.-based Rees Jones Inc., which is closely held, may benefit, too.

But demand for second homes could be restrained if mortgage rates rise as the Federal Reserve raises its interest-rate target. Qualifying for a mortgage could also become more difficult as the cost of carrying debt on credit cards increases.

Federal Reserve policymakers raised their target for overnight loans between banks a quarter point to 1.25 percent on June 30, the first increase in four years, to ward off inflation. Economists expect another quarter-point rise at the Fed's next meeting, on Aug. 10.

Home builders, including Pulte, also that said that rising energy costs, local property tax increases and declining consumer confidence could slow home buying.

"We don't fear rising rates," Pulte chief executive Richard J. Dugas Jr. said. "Fifty percent of the 'active adult' buyers pay cash."

The pool of likely second-home buyers -- people ages 35 to 65 with household incomes above $125,000 -- will almost double in the next five years to 11.4 million, according to a study by Centex Destination Properties, the vacation-home unit of Dallas-based home builder Centex Corp.

Americans who were 50 and older controlled two-thirds of U.S. wealth in 1998, up from 56 percent in 1983, according to a 2001 analysis by AARP. Median net worth of families headed by someone 50 or older increased to $134,000 in 1998, from $98,000 in 1983, the report said.

Mary Koehlinger, 58, a homemaker from Brockton, Mass., is seeing the impact of demand on prices firsthand. She and her husband, James, an accountant, are buying at Spruce Creek Country Club in Summerfield, Fla.

"We locked in at the right time," she said.

They signed a contract four months ago to buy a three-bedroom house for $220,000 and will close in September, she said. Today, similar homes in the Del Webb development are selling for $255,000, she said.

The lowest mortgage rates since the 1960s and inheritances fattened during Wall Street's boom years from 1995 to 1999 helped fuel demand for vacation properties.

While the U.S. average rate for a 30-year fixed mortgage has risen more than half of a percentage point in the past three months, borrowing costs remain low enough to make a second-home purchase affordable, said David Berson, chief economist at Fannie Mae, the largest U.S. home-loan financier.

The annual average rate for a 30-year fixed home loan probably will be 6.2 percent this year, which, aside from last year, would be the lowest since 1966, Berson said. Last year, the average was 5.8 percent, the lowest since 1965. The rate probably won't break 7 percent until 2006, Berson said.

Many buyers are looking for more time with their families after spending their thirties and forties building careers.

"We're trying to have more fun in the second half of our lives," said Michael Mosley, 55, who lives in San Diego and owns a ranch-supply and saddle shop. He and his wife, Wendy, are building a three-bedroom house in La Paz, Mexico, that they plan to use for retirement.

The vacation-home market was boosted by a 1997 federal tax-law change allowing married couples to exclude from capital-gains tax as much as $500,000 profit from selling their home, said Linda Goold, an NAR tax lawyer. Under the old law, sellers had to reinvest capital gains in a more expensive property to avoid the tax.

The change allows people whose children have grown up and left home to trade a large home for two smaller properties without taking a tax hit, Goold said. About 21 percent of second-home buyers in 2003 were using some of the equity from the sale of a primary residence to buy two homes, according to an NAR study.

Federal tax laws allow owners to deduct mortgage interest payments for two homes for as much as $1 million in debt, Goold said.

Robert Zamora, 54, president of Zamora Automotive Group, a chain of car dealerships in Stockton, Calif., is keeping his contemporary-style home in Lodi, Calif., as he and his wife, Christine, 53, look forward to more leisure time.

The Zamoras bought a four-bedroom, Tuscan-style home last year at Superstition Mountain Golf and Country Club, about 25 miles east of Phoenix. The house listed for $2.5 million; Zamora would not say how much they paid.

"It's all about recharging my batteries," Robert Zamora said. "When I'm not working, I need a place that's very serene and quiet, where I can play golf with my wife."

They made sure their new vacation home is big enough for their three adult children to visit with their families, he said. The development has two 18-hole golf courses designed by Jack Nicklaus.

Buyers also are using inheritances to purchase vacation properties. The typical middle-class baby boomer is likely to inherit $100,000 to $200,000, after taxes, from World War II-generation parents, said John Havens, a senior research assistant at the Center on Wealth and Philanthropy at Boston College.

"That's not a huge sum of money, but it's enough of a boost to give people the ability to buy a vacation home, if that's what they're dreaming about," Havens said.

Lots remain for houses in Lake Las Vegas, Nev., where many baby boomers are investing in second homes. Sales of vacation homes reached 445,000 last year.