According to the National Association of REALTORS, in 2015, investment purchases saw an increase for the first time in five years. Meanwhile, vacation home sales cooled off but still remained at the second highest amount in nearly a decade.
Reflecting the strong price growth seen throughout the U.S., the median sales price of both vacation and investment homes surged in 2015.
NAR’s coverage of existing and new home transaction in 2015, found that vacation home sales last year declined 18.5 percent from their most recent peak level of 1.13 million in 2015.
Investment-home sales in 2015 jumped 7.0 percent to an estimated 1.09 million in 2015. Owner-occupied purchases jumped 15.9 percent to 3.74 million last year, the highest level since 2007 (9.93 million).
Although vacation homes did take a sizeable step back in 2015, they still came in at the second highest amount since 2006. Baby boomers approaching retirement continue to propel the demand for second homes.
The expanding pool of buyers and diminished number of inexpensive properties led to a tighter supply and fewer sales, which caused the price of vacation homes to rise. Furthermore, the turbulence that hit the economy the second half of the year likely seized some of the potential buyers’ cash.
Many of the areas with the strongest price appreciation in 2015 were in the South and particularly in several Florida markets, the most popular destination for vacation homebuyers. While increasing demand contributed to the run-up in prices, it also probably excluded less affluent households looking to purchase a second property.
The increasing home prices and strong rental demand give more assurance to individual investors that purchasing real estate will diversify their portfolios and generate income if they were to rent out the house, therefore increasing investment purchases.
These sales estimates are based on a national survey of over 2,000 U.S. adults who purchased a residential property in 2015 and exclude institutional investment activity.