U.S. Vacation Homes Fetch Higher Prices in Fewer Sales

The number of vacation homes changing hands in the U.S. slid by a fifth last year as would-be buyers held off amid concerns over the global economy and upcoming election. According to new figures from the National Association of Realtors’ annual survey of homebuyers, vacation-home sales fell to 920,000, down 18.5% from a record 1.13 million in 2014. Nevertheless, this was still the second highest amount since 2006. Lawrence Yun, chief economist at the NAR, said, “The turbulence that hit the financial markets in the second half of the year likely seized some would-be buyers’ available cash.” However, a supply shortage meant that the average price of a vacation home jumped 28% to $150,000 last year. Many of the metro areas with the strongest price increases were in the South — the most popular destination for vacation buyers — and Florida in particular. In contrast, investment purchases of rental properties increased for the first time in five years. They jumped 7% last year to 1.09 million, helping to push the median investment-home sales price to $143,500, up 15.3% from $124,500 a year ago. “Despite a smaller share of distressed properties coming onto the market, investment purchases reversed course in 2015 after declining for four straight years,” said Yun. “Steadily increasing home prices and strong rental demand appear to be giving more individual investors assurance that purchasing real estate will diversify their portfolios and generate additional income if they decide to rent out the home.” Vacation-home sales accounted for 16% of all transactions in 2015 — down from 21% in 2014, but still the second highest share since the survey was first conducted in 2003. The portion of investment sales remained unchanged from a year ago at 19%, and owner-occupied purchases increased from 60% last year to 65%.