Who doesn’t dream about owning that house on the beach, a ski condo in the Rockies, a lakeside bungalow or even a downtown high-rise retreat? As the primary owner-occupied U.S. housing markets continue to recover, likewise goes the vacation home market. One-in-five homeowners owns more than one dwelling unit—either as a vacation home or as an investment.
The National Association of Realtors® (NAR) annually completes an “Investment and Vacation Buyers Survey.” The survey was completed this past March by vacation and investment home buyers in 2012. NAR received responses from 2,326 qualified households that purchased 2,751 dwellings in 2012.
Just like buyers of primary dwelling units, vacation homes saw a significant increase in sales, rising from 502,000 in 2011 to 553,000 in 2012 – up 10 percent. Since peaking in 2006 at 1,067,000 vacation home sales, the number plunged by 59 percent hitting bottom in 2008. The graph below shows annual vacation home sales since 2004.
While the median sales price of primary properties rose just 1.4 percent from 2011 to 2012, and investment properties gained 15 percent, vacation properties rocketed 23.7 percent. Median vacation property home prices since 2004 are shown in the following graph. Remember the axiom of wherever home sales go, prices follow the next 12 to 24 months http://blog.stewart.com/stewart/2013/05/13/another-top-10-list-the-hottest-housing-markets-in-2013/ After peaking in 2005 at $204,100, median price plummeted 41 percent to $121,300 in 2011.
Other findings of vacation home buyers in the survey included:
- Median age was 47 years old, with 46 percent of all buyers younger than 45 and 31 percent older than 54
- Household median income was $92,100 versus $76,600 for primary dwelling buyers
- More than one-half of all vacation home buyers in 2012 had two or more income earners, with 48 percent having two income earners and 8 percent had three or more
- 21 percent of all vacation homes were purchased each in small towns, the suburbs and urban areas/central cities. Resort markets made up 19 percent of sales, while rural areas accounted for 17 percent
- Six out of 10 buyers acquired single-family dwellings, 12 percent each were in either condo/duplex with two to four units and condo/apartments with 5 or more units, and townhouses/row houses made up 10 percent
- Median size was 1,560 square feet, with 18 percent having less than 1,000 square feet and just 8 percent greater than 3,000 square feet in size
- Distressed vacation home purchases made up 35 percent of sales volume (20 percent in foreclosure and 15 percent short sales) with the remaining 65 percent non-distressed transactions
- Median distance from the primary dwelling was 435 miles, with 31 percent located more than 1,000 miles away. 34 percent were within 100 miles of the primary home
- Almost six-in 10 purchased their vacation property via a real estate agent or broker (59 percent) while one-out-of-eight (12 percent) bought the property directly from the owner whom they knew previously
- Three in ten buyers first found the home they purchased on the internet, 25 percent via real estate agents, and 13 percent from relatives or neighbors
- 46 percent of all vacation home buyers paid cash and had no mortgage on the property
- Among buyers using a mortgage loan, 44 percent put down at least 30 percent, while 5 percent financed 100 percent of the purchase
- 80 percent of the buyers plan to use the property for vacations of as a family retreat, while 27 percent have targeted the vacation home as a future primary dwelling
- Almost eight out of 10 buyers (78 percent) thought this a was a good time to buy
In the NAR survey, 23 percent of the buyers indicated they had purchased the property to rent out. In another vacation home article, http://newsgeni.us/?p=107961, while 60 percent of buyers believe their vacation rents will cover their mortgage, they need to be aware that the average property management fee is 21 percent, as reported in a new study by HomeAway.
Just like the primary dwelling market, vacation homes, condos and cabins are making a comeback.