A new report from the National Association of Realtors (NAR) shows that an increasing number of homebuyers are looking to capitalize on post-recession stability by trading in their front porch for the beachfront.
NAR’s 2014 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2013, shows vacation-home sales jumped 29.7 percent to an estimated 717,000 last year, up from 553,000 in 2012. Vacation-home sales accounted for 13 percent of all transactions last year, their highest market share since 2006.
The improvement in the vacation home market was expected by NAR Chief Economist Lawrence Yun.
“Growth in the equity markets has greatly benefited high net-worth households, thereby providing the wherewithal and confidence to purchase recreational property,” Yun said. “However, vacation-home sales are still about one-third below the peak activity seen in 2006.”
The survey showed that the median vacation-home price was $168,700 last year, up 12.5 percent from $150,000 in 2012, and that all-cash purchases remained fairly common in the vacation-home market, as 38 percent of vacation-home buyers paid cash in 2013.
Of buyers who financed their purchase with a mortgage, large downpayments continued to be the norm in 2013. The median downpayment for vacation-home buyers was 30 percent. Forty-two percent of vacation homes purchased in 2013 were distressed homes.
According to the NAR’s findings, the typical vacation-home buyer was 43 years old, had a median household income of $85,600 and purchased a property that was a median distance of 180 miles from his or her primary residence; 46 percent of vacation homes were within 100 miles and 34 percent were more than 500 miles.
The survey showed that more than eight out of 10 second-home buyers for vacation homes said it was a good time to buy, and that lifestyle factors remain the primary motivation for vacation-home buyers.
Buyers listed many reasons for purchasing a vacation home: 87 percent want to use the property for vacations or as a family retreat, 31 percent plan to use it as a primary residence in the future, 28 percent wanted to diversify their investments or saw a good investment opportunity, 23 percent plan to rent to others and 22 percent intend it for use by a family member, friend or relative.
Forty-one percent of vacation homes purchased last year were in the South, 28 percent were in the West, 18 percent were purchased in the Northeast and 14 percent of the vacation homes purchased were in the Midwest.