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Vacation Home Sales Soar: A Geography Lesson for Investors

Millionacres logo Millionacres 6/19/2021 Marc Rapport
map: Vacation Home Sales Soar: A Geography Lesson for Investors © Provided by The Motley Fool Vacation Home Sales Soar: A Geography Lesson for Investors

Oscoda County has the smallest population in Michigan's Lower Peninsula, with about 8,300 residents. It's so small that its county seat, Mio, is unincorporated.

But Oscoda County is ranked No. 2 in the nation among the hottest counties for vacation home sales in the just-released 2021 Vacation Home Counties Report from the National Association of Realtors (NAR).

Oscoda is about four hours north of Detroit, heavily forested, and on the Au Sable River that empties into nearby Lake Huron. Seasonal vacant homes total 5,028 and comprise 54.5% of Oscoda's housing, and in 2020, home sales rose 53.8%, the median price jumped 79.2%, and properties sold 30 days faster than in 2019, the NAR report said.

The median sales price, despite that jump, was $107,500. Compare that to the county at the top of the list: Lee County in Florida. Home to Fort Myers, this venerable retirement and vacation destination on the Gulf Coast had the most seasonal vacation homes, with 90,072, but that's only 23% of the county's housing stock.

Home sales in Lee County rose 10% in 2020, the NAR report said, while the median sales price rose 12.3% to $247,000, and properties sold 45 days faster in 2020 than the year before.

Those two counties help underline the evidence that buyers looking for pandemic relief drove a surge in demand for vacation homes in the second half of 2020 through April 2021, the NAR said.

A vacation home county often means attracting people with means

The NAR defines vacation home counties as those where vacant seasonal, occasional, or recreational-use housing account for at least 20% of the homes.

The trade group said vacation home sales in those counties jumped 16.4% in 2020, compared with 5.6% for total existing-home sales. Then, vacation home sales really accelerated this year, jumping 57.2% from January to April, compared to 20% year-over-year growth in total existing-home sales for those months, and boosting their share to 6.7% of the total.

And while buyers each have their own reason for making this real estate investment -- including for use as a rental property, a vacation destination for themselves, both of those, or as a pandemic work-from-home escape -- one thing many of them have in common is that they paid in cash.

The first four months of this year saw all-cash sales rise to 53% of all vacation home purchases; that's up from under 50% in past years and far above the 22% of all existing-home sales paid for in cash during the same period.

"Realtors all over the country have indicated that buyers in a position to pay in all cash are doing just that," chief economist Lawrence Yun said in a NAR news release. "From a seller's perspective, paying in this manner makes for a much more attractive offer given the strong demand right now for vacation homes."

Michigan, Florida, Maryland, Massachusetts, and North Carolina in the top 10

Besides Michigan (Oscoda and Alcona) and Florida (Lee and Collier), the top 10 vacation home counties were in Maryland (Garrett), Massachusetts (Dukes and Barnstable), and North Carolina (Alleghany, Swain, and Macon).

Among the NAR's nine U.S. divisions, sales growth was strongest in the South Atlantic states of Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and West Virginia, with home sales up nearly 31% in 2020 in those states' vacation home counties.

Following the South Atlantic region, in order, were vacation home counties in:

  • The Middle Atlantic: New Jersey, New York, and Pennsylvania
  • West South Central: Arkansas, Louisiana, Oklahoma, and Texas
  • New England: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont

These counties posted year-over-year sales growth of at least 25%, far outpacing the general housing market.

Altogether, the trade group said that in 2020, existing-home sales from 1,060 non-vacation home counties increased by an average of 11.2% from the prior year, while the 145 vacation home counties recorded a jump of 24.2% for the same period.

Time on the market and the good times may roll on

Interestingly, while time on the market was bouncing around at record lows of approximately 30 days in non-vacation markets, properties in vacation home counties typically stayed on the market for 59 days. Though, that's still 13 fewer days than the pre-pandemic year of 2019.

The NAR expects that demand to continue.

"The enduring opportunity for remote work will continue to raise the already high demand for property in these counties, particularly in those counties with reliable broadband internet service," Yun said.

The Millionacres bottom line

The 20-page report provides a really nice high-line view of multiple markets across the country for those interested in a new place to live full-time, temporarily retreat, or invest in to rent out or sell -- if you can land the right deal at the right price.

With their diverse geographies and climates, these vacation homes are in some of the more scenic, attractive places to visit. Thus, their appeal should endure long after the coronavirus is all but a bitter memory, and the desire and means to work from home linger.

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