This week’s freezing temperatures (for April) are probably causing many East Coast and Midwest residents to wish they had a vacation home in a much warmer locale. Although Winter 2015 was also bone-chilling, the blustery air wasn’t enough to fuel vacation home purchases.
After surging in 2014 to an all-time survey high, vacation home sales retreated quite a bit in 2015, but still remained at their second-highest level since 2006.
According to Lawrence Yun, NAR chief economist, the sizable drop (-18.5 percent) in vacation sales can be chalked up to tight supply, higher prices and fewer bargains to be had. Furthermore, the wild swings in the stock market during late summer and fall last year also seized some would-be buyers’ available cash.
Not all went down in the 2016 NAR Vacation and Investment Home survey. Investment purchases increased for the first time in five years, and the prices of both vacation and investment homes jumped considerably. There’s a close relationship there. Increasing home prices and strong rental demand are giving individual investors assurance that purchasing real estate will diversify their portfolios and generate additional income if they decide to rent out the home.
The “Airbnb” effect may also be apparent in this year’s survey. Forty-two percent of investment buyers did or tried to rent their property for less than 30 days in 2015 and plan to do so in 2016.
Maybe it’s not too late to look at short-term rentals in Florida. This weekend’s weather in D.C. is not looking good!
Here are a few additional highlights from the 2016 NAR Vacation and Investment Home survey:
- Market share – vacation (16%; 2nd highest of all time); investment (19%; unchanged from 2014); owner-occupied (65%; 60% in 2014)
- Median sales price – vacation ($192,000; 28%); investment ($143,500; 15.3%)
- All-cash – vacation (38%; 30% in 2014); investment (39%; 41% in 2014)
- Distressed properties – vacation (36%; 45% in 2014); investment (39%; 44% in 2014)
- HH income – vacation ($103,700; $94,380 in 2014); investment ($95,800; $87,680 in 2014)
- Type of Property – More vacation buyers bought a single-family home (58%; 54% in 2014)
- Median distance – vacation (200 miles); investment (22 miles)
- Primary reasons for purchase – vacation (37% family retreat/vacations; 16% future retirement); investment (42% rental income; 16% low prices/buyer found good deal)
- Location – South (47% vacation; 37% investment)