The National Association of Realtors (NAR) reports that sales in the vacation rental and investment market have been stable. About as many people as in 2009 decided in 2010 to buy a second home to either rent it out or keep it as an investment. 10% of homes sold in 2010 were designated as vacation rental properties while 17% of homes sold were investments properties; this is the same number as in 2009.
Lawrence Yun, Chief Economic Researcher of the association was surprised to find that despite tougher criteria in obtaining mortgage there was no drop in sales on second homes. He states “many buyers just paid cash”. In 2010 59% of all investors were found to pay cash.
Out of all property sales for investment only 17% came from the foreclosure market; 11% of homes sold for vacation rental purposes came from this market. The association found that only 5% of first home buyers bought in the foreclosure market. Yun suggests that the buyers of second homes are more prone to look for bargains and discounts than buyers looking for a home for themselves.
The median price paid for a second home to rent out to vacation renters comes to US$150,000 in 2010, while it was US$169,000 in 2009. The median price for an investment home was found to be US$94,000 in 2010 while a buyer had to pay US$105,000 for the same in 2009. The price for a first home shows only a slight drop of 4.5% between 2009 and 2010 (US$185,000 to US$176,000).
The typical vacation rental home buyer in 2010 was 49 years old and had a median household income of US$99,500; 41% of all vacation rental home buyer bought a home more than 500 miles from their primary residence; many amongst those 41% came from outside of the United States.
The typical investment home buyer in 2010 was 45 years old with a median household income of US$87,500. Investment properties are usually bought in close proximity to the primary household.
Yun states the significant drop in home prices allowed more families to buy a second home than ever before. The second home is used to collect rental income from either short term or long term rentals. 84% of all owners of vacation rental homes state to use those homes to spend a vacation there with their family. Many new owners of a second home also stated that they saw this as a long term investment. 34% of owners of second homes say that they think they will use the house as their first residence when they retire.
32% of all vacation properties were bought in the South, 24% in the Western U.S., 21% in the Northeast, 15% in the Midwest. According to the NAR 7.9 million of homes in the U.S. are vacation rental homes, 41,6 million real estate objects were bought for investment purpose, and 74,8 million homes are occupied by their owners.
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