The vacation home market boomed over the last year. During the COVID-19 pandemic, more and more families escaped to the lake. The demand for vacation homes soared.
According to the National Association of REALTORS®, the rise in popularity of vacation homes is attributed to growth in remote work, increased availability of broadband internet, and greater interest in recreation away from urban areas (NAR, 2021)
Lawrence Yun, chief economist for the National Association of REALTORS® explained, "Vacation homes are a hot commodity at the moment. With many businesses and employers still extending an option to work remotely to workers, vacation housing and second homes will remain a popular choice among buyers" (NAR, 2021)
The 2021 Vacation Home Counties report suggested the general market was hot, but the vacation home market was even hotter. The report compares vacation home counties to non-vacation home counties. A county is a vacation home county when “vacant seasonal, occasional, or recreational use housing account for at least 20% of the housing stock.”
According to the 2021 Vacation Home Counties Report produced by the National Association of REALTORS® (NAR):
Vacation home sales rose strongly in 2020 and in January-April 2021. "The share of vacation home sales to total existing home sales rose to 5.5% in 2020 and to 6.7% in the first four months of 2021. As of April, the share was at 8%. In past years, vacation home sales accounted for about 5% of existing-home sales. Vacation home sales rose by 16.4% to 310,600 in 2020, outpacing the 5.6% growth in total existing home sales and by 57.2% year-over-year during January-April 202 compared to the 20% growth in existing home sales. Sales are averaging at 412,500 on a seasonally adjusted annual basis during the first four months of 2021."
Vacation home buyers are more likely to pay cash. From January-April 2021, 53% of vacation home sales were all cash.
Vacation home buyers are more likely to put down a higher down payment. 77% of vacation home buyers made a down payment of at least 20%.
Vacation homes appeal to first-time buyers, not just second home buyers. 4% of vacation home buyers were first-time buyers.
Vacation home prices rose at a stronger pace. “The median existing home sales price typically rose by 14.2% in vacation home counties, compared to 10.1% in non-vacation home counties.”
Even as the rest of the housing market starts to cool down, the vacation home market is not likely to slow any time soon. Lawrence Yun, chief economist for the National Association of REALTORS® explains, “One near certain aspect of the post-pandemic economy, when it comes, is the flexible work schedule, which is here to stay. It is very hard to envision five days a week in the office. Therefore, vacation home sales will continue to move higher, this year, next year and for the foreseeable future” (Realtor Magazine, 2021).
As companies bring employees back to the office, the popularity of vacation homes is not expected to decline. Also, rental prices for vacation homes are likely to continue to rise.