The primary house market remains red-hot, but the secondary, or vacation, home market is mixed.
According to the National Association of Realtors (NAR) 2016 Investment and Vacation Home Buyers Survey (released earlier this year and covering existing- and new-home transactions in 2015), vacation-home sales last year fell 18.5% from their most recent peak level of 1.13 million in 2014. Still, the group said vacation home sales were the second highest in nearly a decade, propelled mostly by baby boomers. The median vacation home sales price was $192,000, up 28% in 2014.
"The expanding pool of buyers amidst a dwindling number of bargain-priced properties led to tighter supply and fewer sales and caused the price of vacation homes to rise. Furthermore, the turbulence that hit the financial markets the second half of the year likely seized some would-be buyers' available cash," said Lawrence Yun, NAR chief economist.
You Guessed It: Location, Location, Location
A look at three popular luxury second-home regions (prices and sales in the Hamptons, Florida, and the Rocky Mountains) shows how site-specific factors affect sales. This underscores the old real-estate adage that location is everything.
Diane Saatchi, an associate broker for Saunders & Associates in the Hamptons, said generally business is down at least 18% to 30%. Sales for homes under $3 million are closer to being down 18%, while middle-market homes—those priced between $3 million and $15 million—are seeing sales down about 30%.
Weak first-quarter stock market returns and a contentious presidential race sidelined buyers, she said. Additionally, an inventory glut contributes to the slow sales, with new homes on the market and baby boomers putting high-priced, dated homes up for sale that they bought decades ago.
“We have a mismatch in what’s available and what the product is. What was a really robust sellers’ market through 2015 is in the midst of transition to a buyers’ market, and as a result, people are sitting on the sidelines,” she said.
Florida, Rocky Mountains Sales Up
Kurt Westfield, director and co-founder of WC Companies, a real estate investment and research analytics firm, said that in Florida, second-home sales continue to rise.
“Prices are up from both the peak in 2007 and the crash in 2008 to 2009. We can attribute this to a number of factors: increased equity, increased liquidity/cash sales from both domestic and foreign investors, and increased interest in real estate as an investment vehicle,” he said.
Consistent rises in luxury home prices and sales continue in the Rocky Mountains area, said Tricia McCaffrey Hyon, vice president of sales, IMI Mountain Region. Jackson Hole, for example, saw a 9% increase in average sales price and a 10% increase of median sales price in 2016’s first half, she said.
“While country clubs, golf courses, and luxury spas have been driving factors in purchasing mountain vacation homes, we’re seeing buyers in Jackson Hole, Lake Tahoe, Park City, and Colorado show more interest in homes that offer wellness amenities and programming for the entire family, and often three generations of family,” she said.
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