Vacation Home Sales Surge During COVID-19 Pandemic
In the months after COVID-19 hit the United States, vacation home sales shot up, likely the combined result of low-interest rates, a desire to escape amid social distancing and lockdown, and an unprecedented ability to work from anywhere.
It’s part of a major cultural shift around work and homebuying in the United States. For real estate agents working in hot vacation home markets, it’s been a busy year.
“Now that people have that opportunity to work remotely, I think they’re really considering where they want to spend most of their time,” said Bethany Martinez, a Broker Associate and head of The Bemar Team at RelatedISG, a real estate firm in South Florida.
“That’s what I’m seeing. I’m seeing people come down here and say, ‘I can live in South Florida for six months out of the year, three months out of the year, because I can work from anywhere.’”
“A Pandemic Boost”
In mid-2020, vacation home sales began to outperform total existing home sales, the result of “a pandemic boost,” the National Association of REALTORS® says. An estimated 109,100 homes intended for vacation use were sold in 2020 from July to September compared to 75,600 vacation homes sold during that same period in 2019, a 44% increase year over year. In comparison, total existing-home sales during July-September rose 13% year over year (1.72 million in 2020 vs. 1.52 million in 2019).
“The pandemic and low mortgage rates have increased the desirability and affordability of owning a vacation home,” NAR says in a blog discussing the data. “Buyers may be desiring a vacation home as a weekend getaway as urban-based leisure activities are still constrained by social distancing.
The ability to work from home means buyers who can work from home can spend more time at and enjoy their vacation home. Historically low mortgage rates have also made a home purchase more affordable while rising prices in past years have yielded larger home equity gains that can be tapped (through, say, a home equity loan) to use for a down payment.”
Vacation homes also sold more quickly than they had in the past. Of second homes where the sale closed during July-September 2020, 58% sold within one month, NAR says. That echoes a nationwide trend caused by low inventory: 71% of existing homes that closed in September were on the market for less than one month.
Where Are People Buying Vacation Homes?
Unsurprisingly, nine of the top 10 cities where you’re most likely to come across a vacation home are in sunny Florida, says a recent Zillow analysis.
Miami Beach topped the vacation home density list with homes intended for seasonal, recreational, or occasional use comprising nearly 25% of its total homes.
But in all of the cities that made the list, at least one in 10 homes is a vacation home:
- Miami Beach, Florida: 25%
- Pompano Beach, Florida: 19%
- Fort Lauderdale, Florida: 16%
- Cape Coral, Florida: 16%
- Boca Raton, Florida: 13%
- Hollywood, Florida: 12%
- Largo, Florida: 12%
- Clearwater, Florida: 12%
- West Palm Beach, Florida: 12%
- Scottsdale, Arizona: 11%
Since the pandemic began, people have been even more interested in buying a second home — and in moving to South Florida, Martinez said in an interview with The CE Shop.
Martinez’s firm operates primarily in Miami-Dade and Broward counties, which include four of the cities named in Zillow’s list.
“We were already a place where people had second homes and vacationed quite often, but I think people really started pushing for South Florida when the pandemic happened because we have amazing weather, we’re close to the beach, [and] we have tax benefits that other states don’t have,” she said.
Vacation Homes Meet Short-Term Rentals
Martinez also noted that an increasing number of people are interested in buying a second home that they can rent out while they’re away.
“They’re not just looking for themselves anymore,” she said. “They’re also looking for our advice to educate them on, ‘Well, if I want to own a home in South Florida, what do you think is the best area that I could rent out while I’m away?’”
Advising clients on buying a second home that they plan to rent out requires in-depth local knowledge, including knowing which cities or condo associations have restrictions on rentals from sites like Airbnb, Martinez said.
For example, the area where she works is especially condo-heavy, “so, we know what the rules and regulations are with condos,” she said. “We can already tell you, if you’re looking to rent this out short-term, 90% of the condos are not going to work.”
That’s why she has a list of condo associations that allow monthly or daily rentals.
“The legwork has already been done, because it helps save us time, too, when we’re working with clients,” she said.
When she’s working with a buyer, Martinez focuses on helping them find a home that will give them the lifestyle they’re seeking.
“South Florida is very, very large — there’s Miami-Dade County, there’s Broward County, there’s West Palm, there are so many parts to it, there are suburbs, there are cities,” she said. “So, it’s really just seeing like, ‘With the money that you want [to spend] and the lifestyle you want to live, where can I position you in South Florida, and how will that affect your lifestyle? Is it going to take you 10 levels up from where you are now, or maybe not?’ ... But when it comes to an investment standpoint, it’s an easy sale.”
Working in a Hot Vacation Home Market
Real estate agents who want to work with vacation homes should start by looking at what’s already happening in their city, Martinez says.
She recommends using tools such as AirDNA, which provides vacation rental data, to research your area. She also browses vacation rental websites such as Airbnb or Vrbo to see which areas are popular and how much it costs to rent properties there.
“It’s not rocket science, it’s just kind of learning what’s out there and getting familiar with the inventory,” she said. “If you know that there’s a really hot neighborhood located next to a city, or maybe a place where people like to go camping, and you see that people are already doing vacation rentals there, you can start marketing those areas.”
Above all, she encourages real estate agents to take advantage of new opportunities.
Part of her business is fixing and flipping properties to sell, and at one point, she had several properties that just weren’t selling for the price that she wanted.
“One of those properties ended up turning into an Airbnb property and now is generating so much income,” she said. “Right now, we’re in a low-inventory phase, so houses are selling like crazy. But at one point, we weren’t this busy, and there was a lot of opportunity for houses that maybe couldn’t sell but could be rented out as short-term vacation properties… It’s just always looking at the opportunity in things, and being able to create opportunity, even when there is none.”
We couldn’t have said it better ourselves — so get out there, do your research, and you too could turn your local vacation home market into your next real estate niche.
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