Vacation home sales boomed in 2014 to above their most recent peak level in 2006, while investment purchases fell for the fourth straight year, according to an annual survey of residential homebuyers released today by the National Association of Realtors.
Vacation homes are recreational property purchased primarily for the buyer’s (or their family’s) personal use, while investment homes are residential property purchased primarily to rent to others, or to hold for other financial or investment purposes.
Vacation homes often represent a great opportunity for landscape contractors, particularly those providing ongoing maintenance service such as mowing and trimming, lawn care and tree care.
NAR’s 2015 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2014, shows vacation home sales catapulted to an estimated 1.13 million last year, the highest amount since NAR began the survey in 2003. Vacation sales were up 57.4% from 717,000 in 2013.
Stock market strong, baby boomers eye retirement. Lawrence Yun, NAR chief economist, says vacation sales in 2014 showed astonishing growth, nearly doubling the combined total of the previous two years. “Affluent households have greatly benefited from strong growth in the stock market in recent years, and the steady rise in home prices has likely given them reassurance that real estate remains an attractive long-term investment,” he said. “Furthermore, last year’s impressive increase also reflects long-term growth in the numbers of baby boomers moving closer to retirement and buying second homes to convert into their primary home in a few years.”
The typical buyer. The typical vacation home buyer in 2014 had a median household income of $94,380, and purchased a property that was 200 miles away. Buyers plan to own their property for a median of six years.
Although a majority (54%) of vacation buyers bought a single-family home, the share of those buying a condo (27%) or a townhouse or row house (18%) increased from a year ago. Roughly 40% of vacation buyers purchased in a beach area, 19% purchased in the country and 17% purchased a vacation home in the mountains.
One-third of vacation buyers plan to use their property for vacations or as a family retreat, 19% plan to convert their vacation home into their primary residence in the future, and 13% bought for potential price appreciation; the same share purchased because of low real estate prices and because the buyer found a good deal.
By region. Roughly 46% of vacation homes purchased last year were in the South, 25% in the West, 15% in the Northeast and 14% in the Midwest.