In the ever-evolving real estate industry, vacation homes continue to be the top investment choice for prospective buyers seeking homes that match their lifestyle preferences in a popular tourist hotspot. As we enter 2025, the real estate market is projected to grow in vacation properties based on trends like buyer behaviour, demography, and new desirable locations, which are expected to make notable changes in the new year. This article covers the forecasts, the demography, and the hotspots of future vacation homes.
Emerging Trends in the Vacation Home Market:
A shift towards Buyer’s Market:
The housing market is likely to shift towards a buyer’s market during 2025, with owners listing more properties because the mortgage rates are expected to get lowered. It could be an ideal time for buyers when this shift can propel increased inventory and more favourable conditions for buyers.
Design and Lifestyle Preferences:
There is a growing trend towards unique, individualistic and playful approaches to interior design and multifunctional spaces. Decorative items like stained glass, frameless furniture, and handcrafted elements are gaining popularity to give vacation homes a personalized and functional touch.
Sustainability and Eco-Friendly Features:
Buyer desires are shifting towards greener home features and sustainable materials. Today’s buyers are more concerned about purchasing energy-efficient vacation homes, which promote the global commitment to environmental responsibility and sustainability.
Investment & Wealth Diversification:
Buyers see vacation homes as lucrative investments and as an opportunity for wealth diversification. Short-term rental yield often drives location selection, with many buyers expecting rental income to offset 40-60% of ownership costs.
Technology-Driven Vacation Homes:
The integration of advanced technology is revamping the vacation home market, making properties smarter and more appealing to modern buyer demands. Smart home features like automated lighting, enhanced security systems, energy efficient controls, smart home devices, and high-speed internet services are becoming the new normal. Such enhancements cater to the demand for workcations, as homeowners can stay productive while having leisure time in their houses.
Retirement Planning with Vacation Homes:
Second homes are increasingly becoming a great choice for strategic financial investment and retirement planning, especially among baby boomers. Vacation home properties offer dual benefits: a leisure place today and a home to live in tomorrow. Buyers prefer locations that offer favourable climates, excellent healthcare facilities and vibrant communities that facilitate physical activities. By investing in a vacation home early, individuals can secure a future retirement haven while potentially generating rental income to offset the cost.
Demographic Shifts Influencing the Market:
Millennials:
As millennials enter prime homebuying years, their preferences for affordable, functional and sustainable vacation homes are shaping the current market. Their preference for a hybrid work model/ workcation influences the demand for properties that serve the multiple purposes of enjoying serenity while being productive at work.
Baby Boomers:
Buyers nearing retirement age prefer vacation homes located in a serene and tranquil environment that offers easy access to healthcare and recreational facilities in their chosen location.
Gen Z:
New-generation buyers are entering the real estate market with a preference to invest in smaller, entry-level vacation homes that are affordable and offer unique experiences in their chosen location.
Emerging Hotspots for Vacation Homes in 2025:
The National Association of Realtors (NAR) report has identified the top ten housing hotspots to be considered in 2025. These hotspots offer business activity, beautiful landscapes, and lifestyle appeal, making them perfect for buyers who are considering a second home in these regions. Below is a detailed guide on why these locations stand out, along with approximate price ranges, to guide our readers in making the right decision.
Here is a list of NAR’s ten housing hot spots for 2025 (in alphabetical order):
1. Boston-Cambridge-Newton, Massachusetts-New Hampshire
Why Consider: This location is a perfect mix of historic charm and urban sophistication. Boston offers cultural attractions, historical monuments, world-class restaurants and easy access to beautiful beaches. This region has a strong potential for rental income, which makes it even more suitable for investment.
Average Price: It ranges from $500,000 to $1,200,000 (Higher for waterfront properties).
2. Charlotte-Concord-Gastonia, North Carolina-South Carolina
Why Consider: Renowned for its sound economy and location, which is close to both mountains and lakes, this area has numerous diverse recreational opportunities. A vibrant cultural life and high rental demand make it an attractive destination for buyers.
Average Price Range: $350,000–$700,000
3. Grand Rapids-Kentwood, Michigan
Why Consider: This is a gem of the Midwest, with gorgeous craft beer, elegant small towns, and access to beautiful shores of Lake Michigan. It is ideal for buyers who wish to combine colorful travel destinations, cultural flavor with breathtaking natural beauty.
Average Price: $300,000–$600,000
4. Greenville-Anderson, South Carolina
Why Consider: This location is surrounded by beautiful mountains and a lively downtown area, giving people the best of both worlds. It resonates well with buyers searching for comfort and active leisure.
Average Price: $250,000–$500,000
5. Hartford-East-Hartford-Middletown, Connecticut
Why Consider: This region is ideal for the buyer who wants to live close to the city and, at the same time, wants to buy a property that offers a countryside retreat. Known for its rich history and stunning view of the Connecticut River, it’s a haven for relaxation and water-based activities.
Average Price: $400,000–$800,000
6. Indianapolis-Carmel-Anderson, Indiana
Why Consider: Known for its affordable living and great downtown offerings. This region is ideal for buyers seeking value-packed vacation homes in the Midwest with strong rental prospects.
Average Price: $250,000–$400,000
7. Kansas City, Missouri-Kansas
Why Consider: A vibrant arts scene, rich barbecue traditions, and affordable living make Kansas City a unique destination. The area offers a mix of urban attractions and nearby outdoor activities.
Average Price: $250,000–$450,000
8. Knoxville, Tennessee
Why Consider: Located close to the Great Smoky Mountains, Knoxville offers stunning natural views, wonderful opportunities for hiking and a well-developed tourism market. Perfect for nature enthusiasts and investors planning to buy a vacation home.
Average Price: $300,000–$600,000.
9. Phoenix-Mesa-Chandler, Arizona
Why Consider: Being famous for the sunny climate all year round and great golf courses, this area strikes the perfect balance between luxury and affordable properties. With abundant outdoor activities and a robust rental market, it’s an excellent choice for buyers.
Average Price: $400,000–$800,000
10. San Antonio-New Braunfels, Texas
Why Consider: This region offers a perfect mix of historical landmarks, cultural festivals, and family-friendly activities. Prospective buyers can enjoy warm weather and strong short-term rental demand, which can contribute to offsetting property costs.
Average Price Range: $350,000–$700,000
In addition to the NAR’s highlighted hotspots, several other tourist destinations are gaining traction among vacation home buyers. Las Vegas, Nevada, offers a unique mix of vibrant city life and outdoor adventures, supported by favorable tax policies for second-home buyers. Myrtle Beach, South Carolina, stands out with its family-friendly atmosphere, golf courses, and inviting coastal lifestyle, making it especially popular among retirees. For mountain enthusiasts, Colorado Springs, Colorado, provides breathtaking landscapes and abundant outdoor recreation opportunities, all in a serene yet modern setting. Miami, Florida, remains a premier choice with its cultural diversity, lively nightlife, and waterfront properties, adding significant appeal as an international hub. Lastly, Virginia Beach, Virginia, combines urban convenience with a relaxed coastal vibe enriched by strong community ties and historical landmarks.
Final Thoughts
Together, these destinations reflect the diverse preferences of vacation home buyers in 2025. These hotspots provide an equally varied choice of properties, ranging from lakeside retreats to mountain escapes and urban getaways. With price points catering to various budgets, these locations can be an excellent choice that matches your lifestyle preference and strong investment potential. Whether you’re looking for a personal haven or a rental property, these markets deserve your attention in 2025.
