Vacation Home Sales Soar to Record High
John Jordan | April 21, 2015
WASHINGTON—Vacation home sales boomed in 2014 to above their most recent peak level in 2006, while investment purchases fell for the fourth straight year, according to an annual survey of residential homebuyers released on April 1 by the National Association of Realtors.
NAR’s 2015 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2014, showed vacation-home sales catapulted to an estimated 1.13 million last year, the highest amount since NAR began the survey in 2003. Vacation sales were up 57.4% from 717,000 in 2013.
Investment-home sales in 2014 decreased 7.4% to an estimated 1.02 million from 1.10 million in 2013. Owner-occupied purchases fell 12.8% to 3.23 million last year from 3.70 million in 2013. The sales estimates are based on responses from nearly 2,000 U.S. adults who purchased a residential property in 2014, and excluded institutional investment activity.
Lawrence Yun, NAR chief economist, said vacation sales in 2014 showed astonishing growth, nearly doubling the combined total of the previous two years. “Affluent households have greatly benefited from strong growth in the stock market in recent years, and the steady rise in home prices has likely given them reassurance that real estate remains an attractive long-term investment,” he said. “Furthermore, last year’s impressive increase also reflects long-term growth in the numbers of baby boomers moving closer to retirement and buying second homes to convert into their primary home in a few years.”
Vacation-home sales accounted for 21% of all transactions in 2014, their highest market share since the survey was first conducted. The portion of investment sales fell to 19% (20% in 2013); owner-occupied purchases declined to 60% (67% in 2013).
“Despite strong rental demand in many markets, investment property sales have declined four consecutive years to their lowest share since 2010 as rising home prices and fewer distressed properties coming onto the market have further reduced the number of bargains available to turn into profitable rentals,” says Yun.
The median sales price of both vacation and investment homes declined in 2014. The median vacation home price was $150,000, down 11.1% from $168,700 in 2013. The median investment-home sales price was $125,000, down 3.8% from $130,000 a year ago.