Published: April 2, 2014
The vacation-home market bounced back big time in 2013.
Vacation-home sales were up by nearly 30% in 2013, as high-net-worth households returned to the recreational property markets, according to the NATIONAL ASSOCIATION OF REALTORS®.
NAR’s “2014 Investment and Vacation Home Buyers Survey” shows vacation-home sales jumped 29.7%. About 717,000 vacation homes changed hands last year, up from 553,000 in 2012.
Despite the increase, vacation-home sales are still one-third below the market peak in 2006.
Meanwhile, investment-home sales fell 8.5% to an estimated 1.10 million in 2013, down from 1.21 million in 2012.
Vacation homes are properties purchased by buyers who plan to use the home personally. Investment homes are residential properties purchased to rent to others or to hold as an investment.
About 13% of all home sales are vacation-home deals. Another 20% are investment properties.
The investment sales estimates don’t include institutional investment activity, such as bulk home purchases by companies.
NAR Chief Economist Lawrence Yun said the pullback in investment activity is understandable. “Investment buyers slowed their purchasing in 2013 because prices were rising quickly along with a declining availability of discounted foreclosures over the course of the year,” he said.
“In 2011 and 2012, investment property was a no-brainer because home prices had sharply over-corrected during the downturn in many areas, creating great bargains that could be quickly turned into profitable rentals. With a return to more normal market conditions, investors now have to evaluate their purchases more carefully and do their homework,” Yun added.
Other data from the study:
Median investment-home price: $130,000; up 13% from 2012
Median vacation-home price: $168,700; up 12.5% from 2012
All-cash purchases: 46% of investment buyers; 38% of vacation-home buyers
Median downpayment: 26% down for investment buyers; 30% for vacation-home buyers
Distressed deals: 47% of investment homes; 42% of vacation homes
Typical vacation-home buyer: 43 years old; $85,600 in income; buys 180 miles from home
Typical investment-home buyers: 42 years old; $111,400 in income; buys 20 miles from home
Number of U.S. vacation homes: 8 million
Number of U.S. investment homes: 43.7 million
Number of U.S. owner-occupied homes: 74.7 million
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