The median value of US vacation homes have risen 28% year-over-year – led by property in Florida and the South, which accounted for almost half of purchases, new figures show, according to the newly-published 2016 Investment and Vacation Home Buyers Survey from the National Association of Realtors (NAR).
Nearly half of all vacation homes bought last year (47%) were in the Southern US, 6% more than in 2014.
The median sales price of investment homes also rose significantly by 15.3%.
Many of the metro areas with the largest prices rises in were in Florida, says the NAR survey, which covers both new and resale properties.
Investment-home sales reached an estimated 1.09million from 1.02million in 2014, while vacation home sales fell to an estimated 920,000, the second highest figure since 2006.
Lawrence Yun, NAR Chief Economist, says, “Despite a smaller share of distressed properties coming onto the market, investment purchases reversed course in 2015 after declining for four straight years.
“Steadily increasing home prices and strong rental demand appear to be giving more individual investors assurance that purchasing real estate will diversify their portfolios and generate additional income if they decide to rent out the home.”
Baby boomers at or near retirement continue to lead demand for second homes, says Mr Yun.
“The expanding pool of buyers amidst a dwindling number of bargain-priced properties led to tighter supply and fewer sales and caused the price of vacation homes to rise. Furthermore, the turbulence that hit the financial markets the second half of the year likely seized some would-be buyers’ available cash.”
In addition to longer-term rentals, investors are most likely to rent their properties for less than 30 days.
Among investors, 42% rented or tried to rent their property in 2015 and plan to rent their property in 2016 Around a quarter (24%) of vacation buyers rented or tried to rent their property in 2015 and plan to rent their property this year.
Vacation buyers are more likely to use a property manager or social media to rent their property, while investors are more likely to use a traditional real estate agency.
With more vacation buyers purchasing single-family homes (58%) compared to a year ago (54%), the share of those buying a condo (25%) or a townhouse or row house (13%) decreased in this year’s survey.
Over one-third of vacation buyers plan to use their property for vacations or as a family retreat (37%), 16% bought for future retirement plans and only 7% purchased to generate income through renting the property, down from 11% in 2014.
Investment buyers last year purchased property for a variety of reasons, with an increasing share from 2014 citing rental income as the primary reason (42%; 37% in 2014), followed by low prices and the buyer found a good deal (16%), and for potential price appreciation (14%).
Encouraged by rising housing demand and home prices, more than 80% of both vacation buyers and investment buyers believe that now is a good time to purchase real estate.
Source: National Association Of REALTORS®