Photo credit: Special to ACRE
The South leads the way in vacation home demand in 2016
Demand for vacation homes in the South remained high during 2016, according to a new report from the National Association of Realtors, but as supply continues to tighten, sales of second homes have also dipped nationwide.
According to the 2017 Investment and Vacation Home Buyers Survey, vacation home purchases dipped to an estimated 721,000, compared to 920,000 in 2015.
“In several markets in the South and West – the two most popular destinations for vacation buyers – home prices have soared in recent years because substantial buyer demand from strong job growth continues to outstrip the supply of homes for sale,” said NAR Chief Economist Lawrence Yun. “With fewer bargain-priced properties to choose from and a growing number of traditional buyers, finding a home for vacation purposes became more difficult and less affordable last year.”
Demand has certainly grown for condominiums in Baldwin County, along Alabama's Gulf Coast.
In March alone, there were 216 condos sold, according to the Baldwin County Association of Realtors. That is up from 122 sold in March 2016 and 114 condos closed in February of this year.
The number of days a condo sold in March stayed on the market dropped from 178 last year to 137 in 2017.
As with the nationwide trend detailed by NAR, the dip in inventory has caused prices to rise along the coast. While prices remained steady, year-over-year, March's median sales price of $277,250 was 6 percent higher than the five-year average (2012-16) of $261,670.
The median vacation home price nationwide during 2016 was $200,000, according to NAR, up 4.2 percent from the previous year. The median investment home sales price was $155,000, an 8 percent rise over 2015.
“Sales to individual investors reached their highest level since 2012 (1.20 million) as investors took advantage of record low mortgage rates and recognized the sizeable demand for renting in their market as renters struggle to become homeowners,” said Yun. “The ability to generate rental income or remodel a home to put back on a market with tight inventory is giving investors increased confidence in their ability to see strong returns in their home purchase.”