MIAMI – The industry is booming as well-to-do people take advantage of gains in their stock-market portfolios, vacation-home experts said at the National Association of Real Estate Editors spring conference.
Numbers compiled by HomeAway, an online marketplace that links vacation-home owners with would-be renters, tell part of the story. Vacation home sales were up 57 percent in 2014 from 2013, surging to their highest level since 2003, according to survey results.
“We have not seen it as hot for new vacation-home developments in years as it is right now,” said panelist Phillip Day of IMI in Greenville, South Carolina. He said the market has an international aspect, as Europeans and South Americans, always looking for a safe haven for their money, are buying vacation homes in the Caribbean for the rental income.
Developers are even helping the buyers get passports, he said.
In Florida, Miami has the nation’s largest traveler demand for vacation rentals, with Fort Myers Beach at No. 7.
“The overall health of the rental market is very, very strong,” Gray said. “Two trends are accelerating: People are buying homes with the intent to rent them from the beginning. Ninety percent of people who are buying vacation homes — and we are seeing the highest numbers of vacation homes we have seen in a long time — plan to rent in the first year. That is great for the vacation-home market.”
It also is good for the vacation-home owner, because it does not take many weeks of rentals to put a serious dent in the annual carrying cost of a vacation property, Gray said. The average second home, when rented, generates $28,000 per year for the owners.
‘A pretty good time to buy’
The average vacation home costs about $150,000 a year, he said, which is below what it was when the market crashed in 2008.
“So, historically speaking, it is still a pretty good time to buy, in most people’s opinion — 85 percent of vacation-home buyers believe it is a good time to buy. Of course, that is a biased sample. But it creates an opportunity for people to buy into a home they might want to retire in down the road.”
The increase in listings indicates that more people are investing in vacation homes. “Although some wealthy second-home buyers don’t rent them out, Gray said, it actually is better to have people in the house rather than have it sit vacant most of the year.”
“If you had a second home and stayed in it six weeks a year, and it is sitting unoccupied for 46 weeks a year, that is not good for the home,” he said. “If people are staying in it and a cleaning crew is coming in after every stay, the home is in a better state of repair than it would be if you just left it there.”
Author and vacation-home investor Chris Cain, who is writing his third book on the subject, said the industry is picking up after “toddling along” since the bust.
Cain called vacation homes “America’s hidden treasure,” because the industry has provided millions of jobs in property management and maintenance. Most vacation home rentals are handled by management companies to reduce the hassle for owner-investors.
And they are not all rich. The median income of a vacation-home buyer in 2014 was $87,000, according to the panelists.
“More supply means more people are finding what they need in a vacation home,” Gray said. “About 84 percent of those people loved their stay and want to come back the next time. It creates a cycle where they tell their friends, and it makes the investment category more mainstream.”
Herald Tribune 6/25/2015