The connection between vacation homes and household wealth is about to turn into the discussion of the chicken or the egg… which came first? In today’s blog, we are excited to reveal the just-released stats from the National Association of Realtors (NAR)® pertaining to home equity, second home demand and median price growth.
While it’s natural to assume that you have to be wealthy in order to buy a second or vacation home, NAR’s 2019 Vacation Home Counties Report actually indicates that buying a second home creates household wealth, even more so than a primary residence! When analyzing price increases (think equity!) for home types, median home prices for second homes rose 36% compared to 31% for existing and new primary residences (for the 5-year period ending in 2018).
Other notable findings include:
| US household net worth reached an all-time high of $100.3 trillion in 2018, double the figure from 10 years ago. Much wealth came from home values which rose $200 billion. NAR® Chief Economist Lawrence Yun cites that this growth has fueled vacation home demand.
| Second homes gained significant value in both expensive AND inexpensive areas across the country in ‘vacation home counties’ where second homes make-up 20% or more of the area’s residences.
| While Florida and California certainly have their share of vacation properties, other notable vacation home counties reside in Maine, Pennsylvania, New York, New Hampshire, Maryland, Delaware, North Carolina, Vermont, Georgia, South Carolina, Arizona, Idaho and Oregon.
| Black Knight records indicate that the median home price for a vacation home in many areas is less than $100,000, with the least expensive vacation home properties located in non-coastal areas of Maine, and in New York, Pennsylvania, Missouri, and Michigan.
| If a family purchased a vacation home in one of the least expensive vacation home destinations and put 20% down – the annual mortgage payment would be less than $5,000 and account for less than 10% of the family’s income (based on a formula taking into account median income & median home price).
WOW! We have always known that home can be a significant wealth asset – but did you know that your vacation home may create even more wealth than your primary residence? Second homes not only make amazing family vacation spots or placeholders for future retirement residences… they can dramatically increase your personal wealth (through record price growth of 36% in many cases!). You may no longer be asking yourself why you should purchase a second home… but why NOT?
If you would love to chat more about the prospect of buying a second property or would like an introduction to an agent in one of the top vacation home counties… please do not hesitate to reach out today!
All my best,
Bobbi Decker & Associates fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. For more information, please visit: http://portal.hud.gov/