Home-buying activity in vacation home markets has been riding high off the pandemic-induced boom as experts say shifting buyer preferences helped sales surge.
“I think the pandemic is driving this demand for second homes,” says Gay Cororaton, senior economist and director of Housing and Commercial Research for the National Association of REALTORS® (NAR).
Sales of vacation homes surged during the COVID-19 pandemic, outpacing the overall housing market, according to the 2021 Vacation Home Counties Report released by NAR in June.
The study showed that vacation home sales rose by 16.4% last year compared with an overall growth in existing-home sales of 5.6%. Year-over-year sales of vacation homes also jumped 57.2% compared to the 20% growth in total existing-home sales during the same period.
While low mortgage interest rates coupled with pandemic-fueled savings contributed to ongoing activity in vacation markets nationwide, experts say an overall re-evaluation of where and how buyers wanted to live played a pivotal role in the increased activity.
“I think the experience of the past year and a half has definitely made people appreciate the value of having a place to take refuge from either everyday life or a global pandemic,” says Danielle Hale, chief economist at realtor.com®.
As homebuyers flooded the real estate market in the second half of 2020 and through April 2021, Hale indicates that a lot of the buyer demand came from larger urban areas.
“I think that is part of the story,” Hale says. “If you look at the top areas where people are viewing, they tend to be coming from the big cities.”
The trend has made its way south, as agents say an influx of buyer demand from bigger cities has also helped shift buyer demographics in specific markets.
“I think when people were forced to stay home, they started to re-evaluate where they wanted to be and where they wanted their home to be,” says Jody Lovell, broker/owner of Highlands Sotheby’s International Realty in North Carolina, which features several of the top vacation home counties noted in NAR’s study.
According to Lovell, she’s seen buyers migrating from markets they’ve never had before, including San Francisco, Chicago, Boston and New York.
Summer hotspots in Maryland such as Ocean City and Deep Creek Lake have also experienced more buyer interest, according to Nick Waldner, president and CEO of the Waldner Winters Team with Keller Williams in Columbia, Maryland.
“You saw many people that realized that they could still get away and do things in a way that was safe during COVID, but this was also something that they wanted,” Waldner says, adding that many buyers opted to buy a secondary home amid travel restrictions and shutdowns nationwide.
Increased remote employment opportunities with companies in urban areas also played a part in the growing activity, according to Holly Powell, an agent with Berkshire Hathaway HomeServices New England Properties.
According to NAR’s study, New England region sales generally climbed 25.3% in 2020 in vacation home counties.
“I think it started with having to get out of the city and relocate elsewhere, and people wanted to move somewhere fun and cool,” Powell says, adding that younger professionals have been escaping the city amid the possibility that remote work would become a permanent situation.
Tight Inventory, Cash Buyers
Housing inventory is still tight across the nation, which some experts suggest could breed competition among traditional vacation homebuyers and other buyers looking for a more permanent stay.
“It used to be that if you’re buying a home simply for vacation use, now that people can work from home—though that’s still evolving—that second home is practically becoming a primary home,” says Cororaton. “I think moving forward we could see higher demand for homes in the vacation home counties from first time buyers and primary residency buyers.”
Amid an ongoing supply shortage, NAR noted there had been an increase in the number of buyers willing to pay for homes in all cash.
From January through the end of April 2021, all-cash sales increased to 53% of all vacation home purchases, up from under 50% in past years. In comparison, 22% of all existing-home sales over the same period were all-cash sales.
“Some prices in vacation home counties could also be cheaper, because they are typically in the suburban or rural area,” says Cororaton, adding that roughly 4% of vacation home buyers are first-time buyers.
“Your vacation homebuyers are still people that want a second home,” Cororaton continues. “But, moving forward, we could see first-time buyers purchasing into vacation home counties because they can work from home and get to enjoy that vacation home more.”
Jordan Grice is RISMedia’s associate content editor. Email him your real estate news ideas to firstname.lastname@example.org.