Sales of Vacation Homes Jump 10% in 2012

by devteam April 3rd, 2013 | Share

The improving economy is leading tornmixed results for sales of non-owner occupied properties.  The National Association of Realtors® (NAR)rnreported today that sales of vacation homes increased in 2012 while investorsrnpulled back a bit from the single family market.</p

There were 553,000 homes classified asrnvacation homes sold in 2012, up 10.1 percent from 502,000 in 2011.  While vacation home sales were up, theirrnmarket share of 11 percent was unchanged from 2011 as owner occupied sales jumpedrn17.3 percent to 3.27 million properties compared to 2.79 million in 2011.  The median sales price for a vacation homernwas $150,000 compared to $121,300 in 2011.</p

Investment home sales declined 2.1rnpercent to 1.21 million from 1.23 million in 2011 and represented 24 percent ofrnthe single family market compared to 27 percent in 2011.  While both sales and market share declined,rnsales of investment homes were still elevated by historic standards.  Thernmedian investment-home price was $115,000 in 2012, up 15.0 percent fromrn$100,000 in 2011, </p

NAR collected the data in its 2013rnInvestment and Vacation Home Buyers Survey which covered existing and new-homerntransactions in 2012.  </p

NARrnChief Economist Lawrence Yun said favorable conditions are driving second-homernsales.  “We had a strong stock market recovery, which helps more people inrnthe prime ages for buying vacation homes.  Attractively pricedrnrecreational property is also a big draw,” he said.</p

“Investorsrnhave been very active in the market over the past two years, attracted mostlyrnby discounted foreclosures that could be quickly turned into profitablernrentals,” he continued. “With rising prices and limited inventory, notably inrnthe low price ranges, investors are likely to step back in coming years.”</p

Halfrnof investment purchase and 46 percent of vacation-home transactions werernpurchased with all-cash and where mortgages were involved large downpaymentsrnremained typical.  The median downpaymentrnfor both vacation and investment homes was 27 percent, unchanged from a yearrnearlier.    Forty-seven percent of investment homesrnpurchased in 2012 were distressed homes, as were 35 percent of vacation homes.</p

Sixrnpercent of homes purchased by investment buyers last year have already beenrnresold, and another 8 percent are planned to be sold within a year.  Inrnthe 2011 study, 5 percent of investment homes were already resold, and 8rnpercent were planned to be sold within a year.  Overall, investment buyersrnplan to hold the property for a median of 8 years, up from 5 years in 2011.</p

 “Property flipping modestly increased in inrn2012,” Yun said.  “However, this isn’t flipping in the sense of what tookrnplace during the housing boom.  Rather, investors generally are renovatingrnand improving properties before placing them back on the market to resell at arnprofit.”</p

Buyersrnlisted many reasons for purchasing a vacation home:  80 percent want tornuse the property for vacations or as a family retreat, 27 percent plan to usernit as a primary residence in the future, 23 percent plan to rent to others andrn23 percent wanted to diversify their investments or saw a good investmentrnopportunity.</p

Fifty-fivernpercent of investment buyers said they purchased for rental income, 30 percentrnwanted to diversify their investments or saw a good investment opportunity, andrn20 percent wanted to use the home for vacations or as a family retreat.</p

Forty-fivernpercent of vacation homes purchased last year were in the South, 25 percent inrnthe West, 17 percent in the Northeast and 12 percent in the Midwest. Thirty-sixrnpercent of investment properties were located in the South, 28 percent in thernWest, 20 percent in the Northeast and 16 percent in the Midwest.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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