Vacation Home Sales Spike Thirty Percent in 2013 According to New Research from HomeAway and National Association of Realtors
- Eighty nine percent of vacation home buyers plan to rent within twelve months
- The average age for vacation home buyers is only 43 years old
Seventy eight percent of vacation home buyers cited rental as influential to their purchase decision
AUSTIN, TEXAS, April 2, 2014 – Vacation home sales grew exponentially in 2013, with a 30 percent growth in sales from 2012 and a 47 percent growth since 2011. Among those vacation homes sold, 89 percent of them will be entering the rental market within a year, according to the 2014 Investment and Vacation Home Buyers Survey by the National Association of Realtors® (NAR).
NAR reveals that 717,000 vacation homes were purchased last year, the most since 2006 before sharp declines in the real estate market took effect. As part of the survey, proprietary research commissioned by HomeAway, Inc. shows nearly all (89 percent) vacation home buyers plan to rent their new property within the next 12 months, with 86 percent of those buyers renting to vacationers, business travelers or other short term tenants.
Rental income holds significant appeal for buyers of vacation homes. For nearly eight in 10 buyers (78 percent), rental income influenced their decision to buy last year, a seven percentage point increase since 2011.
Also according to the NAR survey, the median sales price experienced a rise again this year, from $150,000 in 2012 to $168,700 in 2013 (a 12.5 percent increase), the second consecutive year with a price increase after historic price slumps in five of the previous eight years.
“Though bargain-basement pricing is becoming rarer in recent years for vacation homes, we’re still seeing prices lower than they were seven years ago, indicating there are still good deals to be had,” says Brian Sharples, chief executive officer of HomeAway®.”
Despite the rise in prices, approximately 58 percent of buyers with a mortgage believe they’ll make enough rental income to cover at least half of their mortgage by renting their vacation home. From separate research of HomeAway, 54 percent of vacation rental owners are actually able to cover more than three quarters of their mortgage from renting their vacation home[i].
With more vacation home buyers opting to finance their new purchase with a mortgage in 2013 (62 percent in 2013 versus 53 percent in 2012), the ability to rent the home to offset the cost of ownership is very attractive.
Buyers are also getting much younger each year. The median vacation home buyer’s age in 2013 was only 43 years old, a record low and marked seven year difference from just two years ago.
“It’s not surprising to see younger buyers taking advantage of the opportunity to purchase property at a lower market value and cover the cost of the home by renting to families and groups looking for a unique vacation accommodation,” says Sharples. “The average owner on HomeAway grosses an income of more than $27,000 from renting their home[ii], creating an income stream from an otherwise unused asset.”