U.S. Vacation Homes Sales Remain at High Level - Second Homes on Useppa Island

Baby Boomers propel demand for vacation homes.

In 2015, total annual U.S. vacation home sales reached the second highest level since 2006, according to the National Association of Realtors® 2015 Investment and Vacation Home Buyers Survey.

“Baby boomers at or near retirement continue to propel the demand for second homes”, says Lawrence Yun, NAR’s Chief Economist and Senior Vice President of Research. “The expanding pool of buyers amidst a dwindling number of bargain-priced properties led to tighter supply and fewer sales, causing the price of vacation homes to rise.”

Vacation home sales last year dipped to an estimated 920,000, down 18.5 percent from a recent peak of 1.13 million in 2014. Still, vacation sales were at the second-highest amount since 2006 (1.07 million). The median vacation home price was $192,000, up 28 percent from $140,000 in 2014.

According to Yun, many of the metro areas with the strongest price appreciation in 2015 were in the South — the most popular destination for vacation buyers - and particularly in several Florida markets. While increased buyer demand contributed to the run-up in prices, it also likely squeezed less affluent households looking to purchase vacation properties.

The survey found that more second-home buyers are choosing to invest, and investment purchases climbed 7 percent in 2015. Owner-occupied investment purchases increased 15.9 percent to 3.74 million – the highest level since 2007.

“Despite a smaller share of distressed properties coming onto the market, investment purchases reversed course in 2015 after declining for four straight years,” says Yun.

Characteristics of Vacation-Home Purchases

With more vacation buyers purchasing single-family homes (58 percent) compared to a year ago (54 percent), the share of those buying a condo (25 percent) or a townhouse or row house (13 percent) decreased in this year's survey. Forty-percent of vacation buyers purchased in a beach area, 19 percent purchased in the mountains or at a lakefront and 16 percent purchased a vacation home in the country.

Over one-third of vacation buyers plan to use their property for vacations or as a family retreat (37 percent), 16 percent bought for future retirement plans and only 7 percent purchased to generate income through renting the property, a decrease from 11 percent in 2014. 

Florida Association of Realtors®, August 2016
National Association of Realtors®, April 2016