Sales of vacation homes fell by almost 22 percent year-over-year, to their lowest level since 2013, according to the National Association of Realtor’s 2017 Vacation and Investment Home Survey, which covers existing and new-home transactions in 2016. The NAR says the reason for the drop was that buyers were left with fewer, and more expensive choices for vacation homes.
The NAR said vacation home sales have actually fallen by 36 percent since 2014, when 1.13 million such properties were sold.
“In several markets in the South and West, the two most popular destinations for vacation buyers, home prices have soared because substantial buyer demand from strong job growth continues to outstrip the supply of homes for sale,” Lawrence Yun, the NAR’s chief economist, said in a statement. “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.”
The survey found that most vacation home buyers and investors in the last year were more likely to buy the home with a mortgage, and use the property for short-term rentals.
Indeed, investment vacation home sales increased over the last year by 4.5 percent. Sales to individual investors hit their highest level since 2012 as they sought to take advantage of low mortgage interest rates and the growing demand for rental homes.
“The ability to generate rental income or remodel a home to put back on a market with tight inventory is giving investors increased confidence in their ability to see strong returns in their home purchase,” Yun said.
Tight inventory conditions pushed median sale prices of both vacation and investment homes last year to near decade highs. The median sales price of a vacation home was $200,000 last year, a 4.2 percent year-over-year increase and the highest since 2006. The median sales price for an investment property was $155,000, an 8 percent increase and the highest since 2005, according to NAR’s report.
Vacation sales accounted for 12 percent of all transactions last year, the lowest share since 2012. Investment sales accounted for 19 percent of overall sales, unchanged from last year.