Vacation home purchases improve markedly in 201104/04/2012
In what may be a sign that Americans will be taking advantage of the restful days of summer, sales of vacation homes surged this past year, a new report from the National Association of Realtors indicates.
According to NAR's "Investment and Vacation Home Buyers Survey," which covers both existing- and new-home transactions, vacation-home sales jumped 7 percent in 2011 to total 502,000 units sold, up from 469,000 in 2010. Investment-home sales also received a bump, rising more than 64 percent to 1.23 million from 749,000 two years ago.
Investment-home sales accounted for more than one in four home purchases in 2011, while vacation-home purchases took up 11 percent of home transactions, the report found.
Lawrence Yun, chief economist for NAR, noted how rock bottom closing costs and list prices enabled many people to pay for their purchases more easily.
"During the past year investors have been swooping into the market to take advantage of bargain home prices," said Yun. "Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property."
Yun added that the investment buyer trend indicates the market has been able to successfully absorb the foreclosure crisis that's hamstrung the housing sector's recovery.
Speaking of trends, all-cash purchases have become more common for both investment- and vacation-home purchases in the past several years, data from NAR suggests. For example, last year, nearly 50 percent of investment buyers paid with cash and 42 percent of vacation-home buyers did as well. Of these purchases, 39 percent were foreclosures and approximately half of all investment-homes were distressed.
"Clearly we're looking at investors with financial resources who see real estate as a good investment and who aren't hesitant to use cash," Yun stated.
The report also detailed what the median investment- and vacation-home cost last year. Investment properties carried a median price tag of roughly $100,000, a 6.4 percent increase from $94,000 in 2010. Meanwhile, median prices for vacation home prices fell from $150,000 in 2010 to $121,300 last year, a drop of more than 19 percent.
NAR says the average vacation-home buyer last year was 50 years old, had a median household income of about $88,600 and purchased a residence that was roughly 305 miles away from their year-round home.