Vacation home sales were more robust in 2014 than they were during the most recent peak in 2006, and it's not because of institutional investor activity, a recent report from the National Association of Realtors (NAR) finds.
Although investment purchases of vacation homes fell for the fourth straight year, overall sales reached an estimated 1.13 million, up 57.4% from 717,000 in 2013, according to NAR's 2015 Investment and Vacation Home Buyers Survey.
‘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,’ says Lawrence Yun, chief economist for NAR, in a release. ‘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.’Â
Vacation-home sales accounted for 21% of all transactions in 2014, the highest market share since NAR's survey was first conducted in 2003. The portion of investment sales fell to 19% – down from 20% in 2013 – while owner-occupied purchases declined to 60% from 67% the previous year.
‘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 vacation home price fell to $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 earlier.
The share of owner-occupied buyers who paid cash for vacation homes fell to 30% from 38% in 2013. The share of investment buyers who paid cash decreased to 41% from 46% a year ago.