Sales of vacation homes surged in 2013 as substantial growth in equity markets furnished more well-heeled households with additional cash to spend on property, according to an annual report from the National Association of Realtors.
Vacation-home sales surged 29.7 percent to an estimated 717,000 in 2013 from 553,000 in 2012, accounting for 13 percent of all real estate transactions last year, NAR said in its 2014 Investment and Vacation Home Buyers Survey.
“Growth in the equity markets has greatly benefited high net worth households, thereby providing the wherewithal and confidence to purchase recreational property,” said NAR Chief Economist Lawrence Yun in a statement. “However, vacation-home sales are still about one-third below the peak activity seen in 2006.”
While wealthier buyers snapped up more leisure residences, investors retreated somewhat from the market as prices and mortgage rates increased.
Sales of investment homes dropped 8.5 percent to an estimated 1.1 million in 2013 from 1.2 million in 2012. NAR’s measure of investment sales does not capture purchases made by institutional investors, which have consistently accounted for more than 5 percent of total U.S. home sales in recent months, according to RealtyTrac.
“In 2011 and 2012, investment property was a no-brainer because home prices had sharply overcorrected during the downturn in many areas, creating great bargains that could be quickly turned into profitable rentals,” Yun said. “With a return to more normal market conditions, investors now have to evaluate their purchases more carefully and do their homework.”