Market Update | Vacation Homes in 2021
The effects of 2020 have certainly impacted the real estate industry, and that includes growth in the vacation home sector. In fact, a new study from the National Association of Realtors® shows increases in both sales and demand for vacation homes.
According to the 2021 Vacation Home Counties Report, a flood of buyers entering the market in the second half of 2020 caused a significant rise in the sale of vacation homes.
In 2020, the share of vacation home sales to total existing-home sales increased to 5.5% (5% in 2019). Vacation home sales rose by 16.4%, outpacing the overall growth in existing-home sales of 5.6%. From January to April 2021, the share of vacation home sales to total existing-home sales rose to 6.7%. Vacation home sales jumped 57.2% year-over-year compared to the 20% year-over-year growth in total existing-home sales.
"Vacation homes are a hot commodity at the moment," said Lawrence Yun, NAR's chief economist. "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."
Areas where vacant seasonal, occasional or recreational-use housing account for at least 20% of homes – identified as vacation home counties by NAR – saw sales climb at a rate higher than the overall market during this period. Existing-home sales from 1,060 non-vacation home counties increased by an average of 11.2%, while the 145 vacation home counties recorded a jump of 24.2% from the prior year.
According to the NAR report, median existing-home sale prices in vacation counties also grew faster than in the rest of the country, increasing 14.2% compared to 10.1% in non-vacation home counties.
"The enduring opportunity for remote work will continue to raise the already high demand for property in these counties, particularly in those counties with reliable broadband internet service," Yun said.
While none of our local area counties ranked among the very top locations on the list, East Tennessee's Sevier County did rank 16th out of the top 30 vacation home counties with the largest net domestic migration. This comes as no surprise with the proximity to the gorgeous Smoky Mountains as well as other attractions and desirable vacation amenities.
The NAR report revealed that those who buy vacation homes are more likely to do an all-cash transaction at closing. 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.
"Realtors® all over the country have indicated that buyers in a position to pay in all cash are doing just that," said Yun. "From a seller's perspective, paying in this manner makes for a much more attractive offer given the strong demand right now for vacation homes.
The National Association of Realtors® is America's largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.