26 May Housing Takes A Vacation From Vacation Homes
Summer time is right around the corner and many homeowners are interested in taking a break from the hubbub of daily life. In the past, buying a vacation home was a popular way to get out of the city. Unfortunately, the market in 2016 showed that the demand for vacation homes far outweighs the supply. Vacation home prices are increasing and affordable options are few and far between.
The country’s warmer, more tropical South and West regions are a favorite destination for vacation homebuyers. A growing job market has increased interest in these areas and buyers are eager to settle into summer homes. Due to the high demand in these markets and low supply, home prices have skyrocketed, leaving buyers with fewer inexpensive options to choose from. The market is experiencing rising prices that haven’t been seen in decades, pushing vacation homeowners who take the plunge to finance their homes instead of paying in cash. In 2016, the number of buyers who paid in cash decreased to 28%, a major drop from 38% in 2015.
Though last year saw the lowest percentage of vacation home sales from interested buyers since 2012, investment sales have remained steady for three years running. Inventors are acquiring homes in popular suburban areas, remodeling them, and putting them back on the market for rent. As Lawrence Yun, NAR chief economist, notes, “Sales to individual investors reached their highest level since 2012 (1.20 million) as investors took advantage of record low mortgage rates and recognized the sizeable demand for renting in their market as renters struggle to become home owners.” Needless to say, investors are currently experiencing an upward trend in the vacation home market that homebuyers are not.
Current trends aren’t showing that this will change anytime soon but one can only hope. The demand for vacation homes is evident, but the available affordable inventory will have to catch up before interested buyers see the results. Until then, you can always rent a vacation home when you want to get away.