A vacation home in Holetown, St. James, Barbados. Declining real estate prices, low mortgage rates and solid demand for vacation rentals are attracting vacation-home buyers.
Before the economic downturn hit, Larry Kron purchased a vacation home, then several others, both to provide rental income and to use for vacations. But Kron, who owns Discover Vacation Rentals, didn’t dip his toe back into the vacation home market until recently, when the combination of declining real estate prices, low mortgage rates and solid demand for vacation rentals pushed him back into the hunt.
“Now is the time,” Kron, a Toronto resident, said in a phone call from a vacation property in Costa Rica. “If it’s not the perfect storm, it’s awfully close to it.”
Kron has plenty of company, according to a new survey by the National Association of Realtors, a professional membership group, and Home Away, a national online vacation home rental service. That survey found that sales of vacation homes pushed up 7 percent in 2011 over the previous year.
The survey notes the median sales price of vacation homes has dropped 19 percent in 2011 over 2010. Of the owners who purchased vacation properties last year, that was a real incentive: 33 percent bought primarily because of low real estate prices. The vast majority of the buyers, 91 percent, say they plan to rent their new property within 12 months. (Unsurprisingly, 71 percent of those respondents said rental income influenced their decision to buy.)
Tim Cafferty, owner of Outer Banks Blue Realty Services in Kitty Hawk, N.C., which manages rentals for 225 vacation homes and provides real estate sales services in the area, said he’s not surprised to hear about the survey results. Things are looking up in both local rentals and sales, Cafferty told msnbc.com.
“I had probably best year I’ve seen for rental demand in 20 years” in 2011, he said. “Some weeks, I could have rented our properties three or four times over. The real estate sales side has also been really good … Especially over the last two quarters, we’ve had a good influx of buyers.”
It looks as though some of the new owners have been sitting on their money, waiting for the right opportunity, says Walter Molony, spokesman for the National Association of Realtors: 42 percent of the vacation-home buyers paid cash.
“There’s a bit of pent-up demand,” Molony said. “You can see it in the median age of the buyers – age 50. The typical vacation home buyer was (previously) in their mid- to late 40s.”
Molony said many of the sales are not occurring in nationally known vacation home areas and developments, such as posh ski or beach resorts. “Many are in lesser-well-known areas, places known mainly on a regional basis.” That includes places like Gatlinburg, Tenn., Brown County, Ind., and Williamsburg, Ky.
“Name destination resorts are only a component of the picture,” Molony said. “Most people want to be within an easy drive of their (vacation) home.”
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