If you’re thinking about buying a vacation home, you aren’t alone.
Vacation home sales across the country are soaring, mainly for two reasons: Declining prices mean deals can be had, and empty nesters are flooding into the market.
Baby boomers looking ahead to their days of leisure are snapping up vacation homes at a faster pace than ever, particularly in beach resorts in the South and the West.
Vacation home sales rose 57.4 percent in 2014 compared with 2013 and reached a record high, according to the National Association of Realtors.
In fact, vacation homes now represent 21 percent of all home sales, the highest share since NAR began tracking the market in 2003. An estimated 1.13 million vacation homes were bought last year, up from 717,000 in 2013.
"There are several factors driving vacation home sales, but one of the main ones is pure demographics, with baby boomers nearing retirement age or already retired who plan to downsize," says Jessica Lautz, director of surveys and communications for NAR in Washington, D.C.
"One in five of vacation home buyers say they plan to live in the home full time in the future."
Baby boomers aren’t the only ones getting into the game. Some younger families with investment income or home equity from appreciating home values are opting to buy vacation homes to serve as a place to generate memories with their families, invest for the future and generate income from short-term rentals to offset their own vacation costs.
One-third of vacation home buyers plan to use their property as a family retreat, and 13 percent bought for future price appreciation, according to NAR’s research.
"The rise in the stock market last year contributed to the spike in vacation home sales," Lautz says. "Thirty percent of all vacation home sales were all-cash purchases, and even among those who financed their homes, 48 percent made a down payment of 30 percent or more."
Lautz says these cash sales were a little easier to make because of the lower median cost of vacation homes, which fell 11.1?percent from $168,700 in 2013 to $150,000 in 2014 in spite of increased demand. She says 45 percent of vacation homes bought in 2014 were distressed sales, meaning they were a foreclosure or short sale.
"People are also buying relatively small homes, with a median size of 1,500 square feet," Lautz says. "Some choose to buy condos and townhouses, which are 46 percent of the market, compared to 54 percent of single-family homes."
Buyers of vacation homes traditionally prefer to buy a place close to their primary residence so they can get there on weekends with ease. But according to research by HomeAway, a vacation rental website, that pattern is changing.
The average vacation home bought in 2013 was 322 miles from a primary residence, compared with 49?miles away in 2003.
Beach resort properties are the most popular, attracting 40 percent of buyers, compared with 19 percent in the country and 17 percent in the mountains, according to NAR’s survey.