US Vacation Homes Selling Well

The National Association of Realtors (NAR) reports that U.S. holiday home sales climbed more than 10% when compared to the previous year. Even so, NAR analysts note that …

The National Association of Realtors (NAR) reports that U.S. holiday home sales climbed more than 10% when compared to the previous year. Even so, NAR analysts note that investment purchases have declined in the face of rising prices. Experts attribute the increase to the stock market recovery and overall improvement in economic health, which is providing many individual buyers with enough capital to shop for second homes. Many of these buyers are middle-aged and have healthy incomes, and reported their reason for buying was due to favorable prices. For more on this continue reading the following article from Property Wire.

Holiday home sales in the United States improved in 2012, up 10.1% compared with the previous year but investment sales fell back, data from the National Association of Realtors.

The association, which represents estate agents across the country, said that holiday home sales accounted for 11% of all transactions last year, unchanged from 2011 while investment sales were 24% of the market, down from 27% in 2011.

NAR chief economist Lawrence Yun said favourable market conditions are driving second home sales. ‘We had a strong stock market recovery, which helps more people in the prime ages for buying vacation homes. Attractively priced recreational property is also a big draw,’ he explained.

With prices rising strongly Yun pointed out that it is not a surprise that investment purchased are falling. ‘Investors have been very active in the market over the past two years, attracted mostly by discounted foreclosures that could be quickly turned into profitable rentals. With rising prices and limited inventory, notably in the low price ranges, investors are likely to step back in coming years,’ he said.

The median investment home price was $115,000 in 2012, up 15% from $100,000 in 2011, while the median vacation home price was $150,000, compared with $121,300 in 2011, reflecting a greater number of more expensive recreational property sales in 2012.

All cash purchases remain common in the investment and vacation home market with half of investment buyers paying cash in 2012, and 46% of vacation home buyers doing so. Some 47% of investment homes bought in 2012 were distressed homes, as were 35% of vacation homes.

Claim up to $26,000 per W2 Employee

  • Billions of dollars in funding available
  • Funds are available to U.S. Businesses NOW
  • This is not a loan. These tax credits do not need to be repaid
The ERC Program is currently open, but has been amended in the past. We recommend you claim yours before anything changes.

Of buyers who financed their purchase with a mortgage in 2012, large down payments remain typical. The median down payment for both investment and vacation home buyers was 27%, the same as in 2011.

Investment home buyers in 2012 had a median age of 45, earned $85,700 and bought a home that was relatively close to their primary residence, a median distance of 21 miles, although 29% were more than 100 miles away.  Some 35% of investment buyers purchased more than one property.

Yun also said that property flipping modestly increased in 2012. ‘However, this isn’t flipping in the sense of what took place during the housing boom. Rather, investors generally are renovating and improving properties before placing them back on the market to resell at a profit,’ he explained.

Some 6% of homes purchased by investment buyers last year have already been resold, and another 8% are planned to be sold within a year this compares with 5% and 8% in 2011. Overall, investment buyers plan to hold the property for a median of eight years, up from five years in 2011.

The research also shows that 78% of all second home buyers said it was a good time to buy, compared with 68% of primary residence buyers. ‘This suggests that second home buyers tend to be a step ahead of general buyers in sensing a market recovery,’ Yun said.

The typical vacation home buyer was 47 years old, had a median household income of $92,100 and purchased a property that was a median distance of 435 miles from their primary residence. Some 34% of vacation homes were within 100 miles and 46% were more than 500 miles away.

Buyers said that they plan to own their holiday property for a median of 10 years and lifestyle factors remain the primary motivation for vacation home buyers, while rental income is the main factor in investment purchases.

Buyers listed many reasons for purchasing a vacation home but 80% said it was to use for holidays or as a family retreat, while 27% plan to use it as a primary residence in the future, 23% to rent to others and 23% wanted to diversify their investments or saw a good investment opportunity.

Some 55% of investment buyers said they purchased for rental income, 30% wanted to diversify their investments or saw a good investment opportunity, and 20% wanted to use the home for vacations or as a family retreat. Also 11% of vacation buyers and 16% of investment buyers purchased the property for a family member, friend or relative to use, often for a son or daughter to use while attending university.

In terms of location some 45% of vacation homes purchased last year were in the South, 25% in the West, 17% in the Northeast and 12% in the Midwest. Some 36% of investment properties purchased last year were in the South, 28% in the West, 20% in the Northeast and 16% in the Midwest.

Some 47% of investment buyers said they were likely to purchase another investment property within two years, as did 37% of vacation home buyers while 29% of vacation buyers said they were likely to purchase another vacation home within two years, as did 31% of investment buyers.

NAR looked at US Census Bureau data and analysed it to conclude that there are 7.9 million vacation homes and 43.7 million investment units in the US compared with 75.2 million owner occupied homes.

This article was republished with permission from Property Wire.


Does Your Small Business Qualify?

Claim Up to $26K Per Employee

Don't Wait. Program Expires Soon.

Click Here

Share This:

In this article