The pandemic and low mortgage rates have increased the interest and the affordability of owning a vacation home. Buyers may be looking for a vacation home as a weekend getaway as urban-based leisure activities are still constrained by social distancing. The ability to work from home also means buyers who can work from home can spend more time at, and enjoy, their vacation home. Historically low mortgage rates have also made a home purchase more affordable. Couple that with rising sales prices in the past years that have yielded larger home equity gains that buyers can tap into, such as a home equity loan, to use for a down payment.
Vacation Home Sales are Outperforming Total Existing-Home Sales
What’s fascinating is that sales of homes intended for vacation use, rose 44% in the past three months of July-September 2020, from the same period last year. In comparison, total existing-home sales during July-September rose a healthy 13% year-over-year but fell well short of surging second home sales.
Among the 200 counties* which NAR identified as vacation home counties, 81% had year-over-year sales gains.
Vacation Homes Also Sold Faster than Existing Homes
Not only did more second homes get sold, they also sold faster compared to historical norms. Second homes sold during July-September 2020, 58% of those homes sold within one month compared to 25% one year ago. Nationally, 71% of existing homes that closed in September were on the market for less than one month.
Characteristics of Vacation Home Buyers
Information collected from REALTORS® Confidence Index surveys, ranging from October 2015 - September 2020 reveals that second-home buyers are nearly all repeat buyers and have the financial wherewithal to make an all-cash payment and put down at least a 20% down payment.
♦96% of vacation home buyers were repeat buyers, and the remaining 4% were first-time buyers
♦49% of vacation home buyers paid all cash
♦82% of vacation home buyers made a down payment of at least 20%
♦3% of vacation home buyers were international buyers (non-US citizens)
♦61% of vacation home buyers purchased detached single-family homes
♦89% of vacation home buyers purchased in a resort area (39%), small town or rural area (30%), and suburban (20%)
*The NAR (National Association of Realtors) has identified a county as a vacation home county if at least 20% of the housing stock is for seasonal use. Based on this definition, 10% of 3,142 counties in the United States are vacation home counties. Most are found in the coastal areas and the Great Lakes.
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