Vacation home sales grew exponentially in 2013, with a 30 percent growth in sales from 2012 and a 47 percent growth since 2011. Among those vacation homes sold, 89 percent of them will be entering the rental market within a year, according to the 2014 Investment and Vacation Home Buyers Survey by the National Association of Realtors® (NAR).
NAR reveals that 717,000 vacation homes were purchased last year, the most since 2006 before sharp declines in the real estate market took effect. As part of the survey, proprietary research commissioned by HomeAway, Inc. shows nearly all (89 percent) vacation home buyers plan to rent their new property within the next 12 months, with 86 percent of those buyers renting to vacationers, business travelers or other short term tenants.
Rental income holds significant appeal for buyers of vacation homes. For nearly eight in 10 buyers (78 percent), rental income influenced their decision to buy last year, a seven percentage point increase since 2011.
Also according to the NAR survey, the median sales price experienced a rise again this year, from $150,000 in 2012 to $168,700 in 2013 (a 12.5 percent increase), the second consecutive year with a price increase after historic price slumps in five of the previous eight years.“Though bargain-basement pricing is becoming rarer in recent years for vacation homes, we’re still seeing prices lower than they were seven years ago, indicating there are still good deals to be had,” says Brian Sharples, chief executive officer of HomeAway®. Despite the rise in prices, approximately 58 percent of buyers with a mortgage believe they’ll make enough rental income to cover at least half of their mortgage by renting their vacation home. From separate research of HomeAway, 54 percent of vacation rental owners are actually able to cover more than three quarters of their mortgage from renting their vacation home 1. With more vacation home buyers opting to finance their new purchase with a mortgage in 2013 (62 percent in 2013 versus 53 percent in 2012), the ability to rent the home to offset the cost of ownership is very attractive.