Vacation home sales have dropped significantly, according to a recent study by the National Association of Realtors. Only accounting for 12 percent of all transactions in 2016, vacation home sales fell to an estimated 721,000 transactions—the lowest since 2013 (which saw 717,000 sales) and a 21.6 percent decrease from 2015, when sales amounted to 920,000.
The dip comes as home sales — and home prices — continue to rise across the country. But the vacation home market’s slip may be due to other financial and economic factors impacting those who would buy vacation homes.
“The volatility seen in the financial markets in late 2015 through the early part of last year also put a dent in sales as some affluent households with money in stocks likely refrained from buying or delayed plans until after the election,” Lawrence Yun, NAR’s chief economist, said in the report.
Cost, supply and income
Despite the decline in vacation home sales, the median sales price did increase by 4.2 percent from $192,000 in 2015 to $200,000 in 2016. Yun said the nationwide housing inventory shortage has also effected the vacation home market. “With fewer bargain-priced properties to choose from and a growing number of traditional buyers, finding a home for vacation purposes became more difficult and less affordable last year,” Yun said in the NAR report.
As prices continue to rise, the average income of those buying vacation homes has shown a drop of more than 10 percent. Vacation home buyers’ incomes dropped from $103,700 in 2015 to $89,900 last year. To compensate, the rate of buyers interested in renting increased. More than a fourth of buyers — 29 percent — did or tried to rent their vacation homes in 2016 and plan to try again this year, a 4 percent increase from 2015’s 24 percent.
Despite investment opportunities, there are two main reasons clients are buying vacation homes: 42 percent of homebuyers said their home would serve as a family retreat and 18 percent said it was a purchase in preparation for future retirement.