According to a report just released by Homeaway, sales of vacation homes in 2011 reached a four-year high, fueled by the lowest median sales price in eight years, cheap mortgage rates, and the desire for a family retreat. The research found 33 percent of vacation home buyers purchased a vacation property last year primarily because of low real estate prices, while another 30 percent cited the desire for a family retreat. According to data from a National Association of REALTORS survey, the median sales prices for vacation properties at $121,300, putting ownership within greater reach of more consumers.
Vacation home buyers cited the following factors as the most important reason to buy a vacation home last year:
- Low mortgage rates (13%)
- For future retirement (11%)
- Potential for price appreciation (8%)
- Other (5%)
“The purchase of vacation homes is moving back into the mainstream for a greater number of Americans who are attracted by low prices, rental income potential, and use as a retreat for busy families to get together every year,” says Brian Sharples, chief executive officer of HomeAway. “Although sales of vacation homes are not as high as historic levels, they are clearly showing signs of a sustained recovery.”
Almost all vacation home buyers plan to rent out their property
Nearly all (91%) vacation home buyers say they plan to rent their property within the next 12 months to either long-term or short-term renters or a combination of the two. Of those buyers, 71 percent cited rental income potential as a factor in their purchase decision and nearly three-quarters (74.5%) of buyers believe they will make enough rental income to cover at least half of their mortgage.
According to Sharples, Home Away’s survey conducted of vacation home owners in the 4th quarter of 2011 show that 70 percent generate enough rental income to cover half or more of their mortgage, and 51 percent cover at least three-fourths of their mortgage.
Of those buyers intending to rent their property, about 40 percent plan to make their vacation homes available for rent between one and eight weeks over the course of the next year; 32 percent plan to rent their properties between nine and 26 weeks per year; and 27 percent plan to rent their homes between 27 and 52 weeks per year.
Vacation home buyers are willing to rent their property to more than one type of guest. The majority (70%) of people who plan to rent their property to short-term renters say they’ll rent the home to vacationers, while 37 percent plan to rent to business travelers and 24 percent plan to rent to other tenants, such as college students or people relocating to the area.
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