Source: National Association of REALTORS®
Daily Real Estate News | Thursday, April 02, 2015
It’s a good time to have a vacation real estate niche. Vacation home sales jumped to a record high in 2014, according to the National Association of REALTORS®’ 2015 Investment and Vacation Home Buyers Survey. Vacation home sales climbed to an estimated 1.13 million last year, the highest since NAR began its survey in 2003.
Sales of vacation homes rose 57 percent compared to the 717,000 tally in 2013. Vacation sales in 2014 nearly doubled 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 investments,” says Lawrence Yun, NAR’s chief economist. “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.”
Vacation home sales comprised 21 percent of all transactions in 2014 – the highest market share since NAR began conducting its survey.
As vacation home sales soared, investment purchases dropped for the fourth consecutive year, the report showed. Investment home sales in 2014 fell 7.4 percent to an estimated 10.2 million in 2014 compared to 1.10 million in 2013. The market share of investment sales dropped to 19 percent in 2014 from 20 percent in 2013.
“Despite strong rental demand in many markets, investment property sales have declined four consecutive years to their lowest share since 2010 as rising home prices and fewer distressed properties coming onto the market have further reduced the number of bargains available to turn into profitable rentals,” Yun says.
Here are some additional findings from the report:
Sales prices: The median sales price of vacation and investment homes dropped last year. The median vacation home price was $150,000, an 11 percent drop from $168,700 in 2013. The median sales price of an investment home was $125,000, down 3.8 percent from a year ago when it was $130,000.
All-cash transactions: The share of vacation buyers who paid in all-cash dropped to 30 percent in 2014 compared to 38 percent in 2013. Investment buyers who paid all-cash in their transactions dropped to 41 percent in 2014 compared to 46 percent in 2013. For those buyers who did finance their purchase with a mortgage, 48 percent of vacation buyers and 41 percent of investment buyers financed less than 70 percent of the purchase price.
Distressed properties: Forty-five percent of vacation homes and 44 percent of investment homes purchased last year were distressed properties – either a foreclosure or short sale.
Vacation buyer profile: The average vacation home buyer last year had a median household income of $94,380 – higher than in 2013 when the median income was $85,600. Vacation home buyers also tended to buy a property that was a median distance of 200 miles away, and plan to own their property for a median of six years. Forty percent of vacation buyers bought a home in a beach area, 19 percent purchased in the country, and 17 percent purchased a vacation home in the mountains.
Investment buyer profile: The average investment home buyer in 2014 had a median household income of $87,680 – less than $111,400 in 2013. The median distance of the investment property was 24 miles from their primary residence. Investment buyers purchased property for a variety of reasons, including for rental income (37 percent), because of low prices and the buyer found a good deal (17 percent) and for potential price appreciation (15 percent). Investment buyers plan to hold onto the property for a median of five years. The South was the the most popular choice for investment properties. The majority of investment buyers (37 percent) purchased a property in the South last year, followed by 26 percent in the West, 20 percent in the Midwest, and 17 percent in the Northeast.
Source: National Association of REALTORS®
Isn’t it time you thought about purchasing your next home?