The just-released 2017 NAR Investment & Vacation Home Buyer’s Survey from the National Association of Realtors® (NAR) shows what people buy, how much they paid, how far from where they live the new property is situated, the conduit through which the property was acquired, property characteristics, and how they intend to utilize the property – among others factors.
Regardless of the intended use of the property, each segment of buyers was challenged by the limited availability of homes for sale. The average number of months of inventory of existing homes for sale as reported by NAR in 2016 was 4.4 months (with 6.0 months considered normal), down from 4.8 months average in 2015 and 5.2 months in 2014. [In the first two months of 2017, it was down to an average 4.1 months inventory, making many markets seller markets.]
There was some change in the intent of home purchases from 2015 to 2016. The following table shows the purpose of why buyers acquired the property. The big change was the reduction in vacation homebuyers, from dropping 16 percent of all property sales in 2015 to 12 percent in 2016 – a decline of 25 percent. Primary homebuyers increased from 65 percent of all sales to 70 percent (up 7.7 percent) while the share of investment homebuyers has not wavered from 19 percent for three consecutive years. Also included are median home prices for each segment for both 2015 and 2016.
The next table shows each of these segments peaks and troughs from 2003 through 2016.
Where these properties are located varies significantly among the intended use category. The next table shows the general location of the property acquired. While just 1 percent of the transactions intended to be used as primary dwellings were in resort areas, 8 percent of investment properties were so located. No doubt these use can change over time. Many buy what initially is intended to be their primary dwelling that, over time, transcends to becoming an investment property. Likewise some vacation properties become primary dwellings at retirement.
Vacation properties have special characteristics. The next table illustrates the type of location for this segment.
Other details in the NAR study included the following. Just as with previous tables, the resolution of data is much wider than just these generalized summary statements.
- How far the second-home acquisition was from the primary dwelling varied by a factor of 10 between vacation and investment properties. The median distance for a vacation property from the buyer’s primary residence was 200 miles compared to just 20 miles for investments. One-in five vacation properties (21 percent) were more than 1,000 miles distant.
- While detached single-family homes were the core of primary residences (86 percent), they made up just 59 percent of investment properties and 56 percent of vacation homes.
- Primary residences had a median 1,900 square feet compared to 1,460 for vacation properties and 1,500 for investments.
Essentially one-half of non-primary homes were purchased using a real estate broker or agent (50 percent of vacation homes and 47 percent of investments.
NAR Members can access this report using their REALTOR member LOGIN at https://www.nar.realtor/user/login?destination=/reports/investment-and-vacation-home-buyers-survey#!/login
As previously mentioned, regardless of the intended reason for purchase, prospective buyers will remain challenged with limited listings available for sale in many markets nationwide.
Kudos to NAR for continuing this annual survey providing added insight to homebuyers of all types.