According to Fannie Mae and the National Association of Realtors (NAR), second or vacation homes – those that are neither investment nor primary residences – represented 13 percent of all purchase transactions in 2013 – an increase of 29.7 percent over 2012. This is the highest market share for second homes since 2006, although still about one-third below the peak of sales activity that occurred in 2006.
According to NAR, the typical second-home buyer was 43 years old, had a median household income of $85,600 and purchased their vacation home an average distance of 180 miles from their primary residence. Cash purchases accounted for 38 percent of the vacation home sales.
Lifestyle choices appear to continue to drive the vacation home buyer. Not surprising, 41 percent of vacation homes were located in the South. Affordability appears to also be playing a factor in where buyers are deciding to purchase second homes. The Federal Housing Finance Agency price indices show that the sun-states of Arizona and California kept up with the national recovery, regaining about one third of their home price, while Florida lags behind – reclaiming only 18 percent since bottoming out. This gives vacation home buyers an opportunity to invest in Florida at potentially bargain prices.
Outside the south, 28 percent of vacation homes purchased last year were located in the West, 18 percent were purchased in the Northeast and 14 percent were purchased in the Midwest.
It appears Americans still desire to buy second homes and this has contributed to the growth of the real estate market on a consistent basis since the market hit bottom in 2009. For vacation homebuyers who are seeking to finance the purchase of the home, the lender will require that an appraisal be obtained. In the case of a cash purchase, although not required, obtaining an appraisal by a qualified appraiser is a small investment in a significant purchase. An appraisal should ensure the buyer is not overpaying – particularly important since they are out-of-town buyers.
Valuation Management Group has over 13,000 appraisers nationwide and can assist in obtaining a quality appraisal by a certified appraiser.
Valuation Management Group is a national, full service appraisal management company that manages the appraisal process for community banks, mortgage bankers and credit unions. We take the process from ordinary to extraordinary.