Buying a vacation home can be more than just a getaway or a perfect retreat with family and friends. It could be a better investment choice, a haven and a source of additional income. Whether you desire a beachfront cottage, a grand villa in the mountains, or a lakefront home, searching for that perfect escape takes a lot of effort. In this post, we will discuss the market trends for vacation homes in 2024 and provide a comprehensive guide to assist buyers in understanding the pros and cons, which may help them make the right decision.
Before we start, let’s dive into the current market trends for vacation homes or holiday homes.
Why Vacation Homes Are on People’s Minds?
Ownership of vacation homes has increased with the adoption of a flexible work culture, workcation, a desire for family and friends getaways, better investment opportunities and lucrative tax exemptions.
- The flexible work model, like a hybrid work schedule and workcation, has created a need for second homes with comfortable workspaces and good internet connections in scenic hotspots like Florida, California, and Colorado.
- Vacation homes in tourist hotspots like Miami or Aspen have a high potential for rental income, which can offset the ownership costs.
- Destinations like Lake Tahoe and the Smoky Mountains are all-time favorites for family and friend’s getaways.
- People choose vacation home ownership for wealth diversification in their desired tourist destination to add stability and appreciation to their investment portfolio.
- States like Florida and Texas offer no state income tax and provide additional advantages such as a deduction on mortgage interest and property taxes.
- Vacation homes can serve as future retirement retreats in attractive locations like Florida or Arizona.
- The new types of ownership, such as fractional and co-ownership, are gaining popularity due to their relatively low prices.
Demographics of Vacation Home Buyers
The millennials (aged between 27–42) are leading the market. They are seeking more innovative homes with comfortable spaces, which have the potential to be rented out in future. Meanwhile, middle-aged buyers (43–58) need vacation homes for family/friends retreats or when they see good investment opportunities. The highest proportion of luxury vacation homes near serene places belongs to Baby Boomers aged between 59-76. Most of them are high-end buyers, with the majority earning a household income of $150,000 or more.
Popular Vacation Home Destinations & Price Range
The most sought-after vacation home destinations are coastal areas in Florida and California, mountainous regions in Colorado and Montana, lakeside escapes like Lake Tahoe, and suburban areas like Austin and Charleston. Here are the current pricing options for entry-level homes ($200000-$400000), mid-priced homes ($400000- $1000000), premium homes ($1000000-$5000000), and luxury homes (over $5000000).
How to Choose the Right Vacation Home For Yourself
1. Determine Your Purpose
Before even starting with your property search, it is crucial to understand your primary reason for purchasing a vacation home.
Personal Use: Choose a perfect location that matches your lifestyle, whether you like the serenity of beaches, mountains, or lakes.
Investment Property: Look for locations where short-term rental is in demand, areas that may be attractive during a specific time of the year, or areas with stable long-term rental growth.
Tip for Buyers: Opting for a second home for personal use and renting it out during low seasons can turn the property into a profitable affair.
2. Location is the key
The location of your vacation home is very important and has the potential to impact its value and appeal. The choice of vacation home location should align with your lifestyle goals and your envisioned picture-perfect abode.
Proximity to Activities: Look for a property that is close to places that are popular among tourists, such as beaches, ski resorts, or hiking trails.
Accessibility: Check conveyance factors such as airport proximity or major highway access.
Neighborhood Appeal: Choose a safe, well-maintained neighbourhood with adequate social amenities such as eateries, restaurants, stores, and health care facilities.
Tip For Buyers: Ask the seller for insights into the property’s proximity to popular tourist destinations and amenities.
3. Understand the Costs
Vacation homes come with added financial responsibilities, which include
Purchase Price: Set up a realistic and affordable budget that suits your pocket without compromising on personal and family commitments.
Ongoing Expenses: Property taxes, insurance, particularly in high-risk areas, maintenance costs, and utility bills should be taken into consideration.
Rental Income Potential: The rental income potential can increase the overall appeal of the property and offset the cost. Buyers who understand the rental performance trend can perhaps make a more informed decision.
Tip for Buyers: Ask the seller to provide transparent financial details, such as yield on rental income and maintenance costs of the property.
4. Prioritize Features That Add Value
Whether you’re buying or selling, certain features make a vacation home more desirable:
Scenic Views: A beach-facing, lake-facing, or hill-facing property is a big attraction and is a major selling point.
Outdoor Spaces: Roof decks, patios, fire pits, and infinity pools are among the highly sought-after and desirable amenities.
Comfort and Convenience: Modern kitchens, upgraded appliances, and well-laid-out floor plans add value and enhance the property’s appeal.
Recreational Proximity: Hassle-free access to recreational facilities such as skiing, boating, or hiking activities can add quick brownie points to the property.
5. Focus on Property Inspection
A vacation home is often exposed to very harsh environmental conditions.
Hire a Professional Property Inspector: Look for potential risk factors like flood, pest encroachment, structural damages, plumbing and electrical requirements.
Seasonal Considerations: Make sure that the home you are thinking of purchasing is functional at all times of the year, especially in areas with extreme weather conditions.
6. Know Local Laws and Regulations
Due diligence should be conducted on local laws and regulations by prospective buyers, as understanding local laws is essential, especially for rental properties.
Short-Term Rental Rules: Some areas are prohibited or may require special permits. So, it is advisable to check them before making a purchase.
Tax Implications: It’s always good to know about property taxation and the rental income taxation systems in your chosen location.
Tip For Buyers: Understand and get clarity about HOA rules, rental restrictions, or any other local laws that would limit one’s ability to use the property.
7. Leverage Expert Guidance
It can be challenging to navigate the vacation home market without any expert guidance. Working along with an experienced vacation home real estate agent can bring in all the difference. Real estate experts know the market trends and insights better; they can help you assess property value and find the best properties and better deals for you. They can also assist you in understanding local laws and regulations and provide a hassle-free paperwork experience.
Pro Tip: Trusting experts can save you time and help you avoid making costly mistakes.
Final Thoughts:
Choosing the right vacation home is an exciting journey that involves an amalgamation of lifestyle preferences and smarter financial planning. By defining your purpose, prioritizing the location, evaluating features that add value to your second home, and understanding the costs involved, one will be able to find the perfect abode that brings joy and long-term value. However, do not forget that consulting and working with an expert agent can help you make the right decision at every step and can also streamline the process for a hassle-free experience. Whether you’re looking for an ideal getaway for family and friends, a profitable investment property or both, there is always the perfect property waiting for you!
