The improving economy is leading to mixed results for sales of non-owner occupied properties. The National Association of Realtors® (NAR) reported today that sales of vacation homes increased in 2012 while investors pulled back a bit from the single family market.
There were 553,000 homes classified as vacation homes sold in 2012, up 10.1 percent from 502,000 in 2011. While vacation home sales were up, their market share of 11 percent was unchanged from 2011 as owner occupied sales jumped 17.3 percent to 3.27 million properties compared to 2.79 million in 2011. The median sales price for a vacation home was $150,000 compared to $121,300 in 2011.
Investment home sales declined 2.1 percent to 1.21 million from 1.23 million in 2011 and represented 24 percent of the single family market compared to 27 percent in 2011. While both sales and market share declined, sales of investment homes were still elevated by historic standards. The median investment-home price was $115,000 in 2012, up 15.0 percent from $100,000 in 2011,
NAR collected the data in its 2013 Investment and Vacation Home Buyers Survey which covered existing and new-home transactions in 2012.
NAR Chief Economist Lawrence Yun said favorable conditions are driving second-home sales. "We had a strong stock market recovery, which helps more people in the prime ages for buying vacation homes. Attractively priced recreational property is also a big draw," he said.
"Investors have been very active in the market over the past two years, attracted mostly by discounted foreclosures that could be quickly turned into profitable rentals," he continued. "With rising prices and limited inventory, notably in the low price ranges, investors are likely to step back in coming years."
Half of investment purchase and 46 percent of vacation-home transactions were purchased with all-cash and where mortgages were involved large downpayments remained typical. The median downpayment for both vacation and investment homes was 27 percent, unchanged from a year earlier. Forty-seven percent of investment homes purchased in 2012 were distressed homes, as were 35 percent of vacation homes.
Six percent of homes purchased by investment buyers last year have already been resold, and another 8 percent are planned to be sold within a year. In the 2011 study, 5 percent of investment homes were already resold, and 8 percent were planned to be sold within a year. Overall, investment buyers plan to hold the property for a median of 8 years, up from 5 years in 2011.
"Property flipping modestly increased in in 2012," Yun said. "However, this isn't flipping in the sense of what took place during the housing boom. Rather, investors generally are renovating and improving properties before placing them back on the market to resell at a profit."
Buyers listed many reasons for purchasing a vacation home: 80 percent want to use the property for vacations or as a family retreat, 27 percent plan to use it as a primary residence in the future, 23 percent plan to rent to others and 23 percent wanted to diversify their investments or saw a good investment opportunity.
Fifty-five percent of investment buyers said they purchased for rental income, 30 percent wanted to diversify their investments or saw a good investment opportunity, and 20 percent wanted to use the home for vacations or as a family retreat.
Forty-five percent of vacation homes purchased last year were in the South, 25 percent in the West, 17 percent in the Northeast and 12 percent in the Midwest. Thirty-six percent of investment properties were located in the South, 28 percent in the West, 20 percent in the Northeast and 16 percent in the Midwest.