Vacation Home Sales Cooled Off, Investment Sales Heated Up in 2015

Washington, DC, April 8, 2016—Vacation home sales cooled off in 2015 but remained at the second highest amount in nearly a decade, while investment purchases increased for the first time in five years, according to an annual survey of residential homebuyers released by the National Association of Realtors.

Mirroring the strong price growth seen throughout the U.S., the median sales price of both vacation and investment homes surged in 2015.

NAR's 2016 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2015, found that vacation-home sales last year declined to an estimated 920,000, down 18.5% from their most recent peak level of 1.13 million in 2014.

Investment-home sales in 2015 jumped 7.0% to an estimated 1.09 million from 1.02 million in 2014. Owner-occupied purchases jumped 15.9% to 3.74 million last year from 3.23 million in 2014—the highest level since 2007 (3.93 million). Sales estimates are based on a national online survey including responses from over 2,000 U.S. adults who purchased a residential property in 2015, and exclude institutional investment activity.

Lawrence Yun, NAR chief economist, says vacation sales took a sizeable step back in 2015, but still came in at the second highest amount since 2006 (1.07 million). "Baby boomers at or near retirement continue to propel the demand for second homes, although headwinds softened the overall volume of vacation sales last year," he said. "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."

The median sales price of both vacation and investment homes soared in 2015. The median vacation home price was $192,000, up 28.0% from $150,000 in 2014. The median investment-home sales price was $143,500, up 15.3% from $124,500 a year ago.  

According to Yun, many of the metro areas with the strongest price appreciation in 2015 were in the South—the most popular destination for vacation buyers—and particularly in several Florida markets. While increased buyer demand contributed to the run-up in prices, it also likely squeezed less affluent households looking to purchase vacation properties.

Vacation-home sales accounted for 16% of all transactions in 2015—down from 2014 (21%), but still the second highest share since the survey was first conducted in 2003. The portion of investment sales remained unchanged from a year ago at 19%, and owner-occupied purchases increased to 65% (60% in 2014).