The COVID-19 pandemic has been good for the vacation home market. Many white-collar professionals who were able to work from anywhere with a reliable internet connection did just that—preferably in a newly purchased home on the water or in some scenic, bucolic location.
Both vacation home sales and the prices of these getaways shot up since last spring, according to a recent report from the National Association of Realtors®. Sales of getaway homes rose 16.4% in 2020 compared with the previous year as buyers sought out desirable locations far from the city where they could work with a view.
The boost in vacation home sales was even more impressive in the first four months of this year, soaring 57.2% compared with the same period last year. But last year’s shutdowns may have skewed the numbers lower, resulting in a bigger bump in 2021.
“The pandemic drove this demand for vacation homes,” says Gay Cororaton, director of housing and commercial research at NAR. “There’s really an interest for homes outside of the cities. People are looking for places where they can have more open spaces and where they can combine working from home.”
(The report looked at existing-home sales in the second half of 2020 through April 2021. Existing homes are ones that have been previously lived in, while newly constructed homes were not included in the report.)
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About 20,000 more people moved into these beach, lake, mountain, and other home-away-from-home communities in 2020 than in the prior year.
“Vacation homes are a hot commodity at the moment,” NAR’s Chief Economist Lawrence Yun said in a statement. “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.”
As a result of the increased demand, prices also shot up faster than in the rest of the country. Median prices in vacation home counties increased by a median 14.2%. That was compared with 10.1% for the rest of the country.
Many of these properties sold for all-cash. In the first four months of this year, 53% of all vacation homes sold without mortgages. That’s music to the ears of sellers who don’t have to wait for a mortgage to close or deal with appraisals that don’t match the offer price.
“Cash is king,” says Cororaton. “The housing market is just so tight that if you offer cash, you’re just putting a better deal out there and that’s increasing your chances of getting that home.”
However, vacation homes tended to stay on the market longer than homes in the rest of the country. That’s likely because they are often pricier properties, which can take longer to find buyers who can afford them. They sat for a median 59 days compared with 30 days in non-vacation home counties. It’s worth noting, though, these second or even third homes sold 13 days faster than the prior year.
Where are vacation-home buyers snatching up the most homes?
Buyers sought out beach and lake communities, primarily in the South along the East Coast. The top county was Lee County, home to Fort Myers and Cape Coral on Florida’s west coast. This was one of the state’s more affordable vacation destinations with a median list price for the county at $375,000 in May, according to the most recent Realtor.com® data. The price tag was just under the national median of $380,000.
Next up were Michigan’s Oscoda County, between Lake Michigan and Lake Huron, with a median price of $165,000; Swain County, NC, at $399,000; Collier County, FL, home to Naples, with a median price of $649,000; and Dukes County, MA, home to Martha’s Vineyard, with a median price of $2.2 million.
Rounding out the top 10 were Alleghany County, NC, with a median price of $312,000; Garrett County, MD, at $499,000; Cape Cod’s Barnstable County, MA, at $699,900; Alcona County, MI, at $175,000; and Macon County, NC, at $625,000.
Cororaton believes vacation home sales will remain strong even as the pandemic looks like it’s winding down. That’s because there is still uncertainty regarding COVID-19, and hybrid work schedules may allow people to spend more time in their second homes.
“Most of these vacation homes are either located along an oceanfront, which is a bit more expensive, or they could be in the mountain areas, which are less expensive,” she says. “We’re still going to see a pretty strong demand, at least this year.”
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