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Move over Boomer — there’s a younger crowd swarming the vacation rental market these days.
Younger generations have watched the fluctuating economy and are ready to invest their savings in something they feel is a more solid bet than the stock market: vacation rental homes.
Gen Z and millennials now make up the majority of vacation rental homebuyers at a composition of 51 percent of all vacation rental homebuyers, according to vacation rental management platform Vacasa’s latest Vacation Rental Buyers Report.
That’s up from the 44 percent of all vacation rental homebuyers those generations accounted for in 2021. Comparatively, Baby Boomers make up 18 percent of vacation rental homebuyers and Gen X make up 30 percent. Millennials are overwhelming the majority of this buyer group at 43 percent of all vacation rental homebuyers while Gen Zers make up just 8 percent on their own.
Short-term rental buyers are also primarily motivated by generating income on their property and/or having a place to vacation with family, Vacasa’s report found. Still, the younger generations are thinking more about their property’s investment potential.
“Historically, real estate has been a common strategy to diversify one’s portfolio and, according to Vacasa’s 2022 Vacation Rental Buyers Report, 36 percent of buyers are looking primarily for an investment property — rather than a vacation rental to enjoy for personal use — in addition to generating rental income,” Daned Kirkham, Vacasa’s senior director of real estate, said in a statement.
“The report data also shows that purchase intent shifts with age: Millennials (42 percent) and Gen Z (45 percent) are more likely on the hunt for investment properties that can be a means to build wealth, compared to Boomers (24 percent) and Gen X (32 percent).”
Who are vacation rental buyers in 2022?
The typical vacation or short-term rental homebuyer today is an experienced homeowner who wants to enjoy their rental on a personal level and as an investment property.
About 82 percent of buyers already own a primary residence whereas about 1 in 5 is buying a vacation home before buying their own home. About one-third of buyers primarily want the property as an investment property and 64 percent are motivated to buy the property for their personal use.
Most potential vacation rental buyers (31 percent) make upper-middle-class salaries between $50,000 to $99,000 per household. Just 22 percent of potential buyers make between $100,000 to $149,000 per household. A slight majority of potential vacation rental buyers want to purchase properties that are less than $400,000 at 54 percent of buyers, while 46 percent of buyers are willing to pay more than $400,000. By and large, younger generations are looking for pricier properties with 54 percent of millennials and Gen Zers looking to buy above $400,000, compared to the 37 percent of older generations looking in this price range.
Vacation rental buyers seem to be shifting toward owning multiple rental properties this year — 45 percent of buyers already own at least one vacation rental property compared to the 32 percent in 2021 who already owned one property.
Seasoned vacation rental buyers are also much more likely to purchase a new rental property sight-unseen than first-time buyers. Roughly three-quarters of vacation rental buyers who own two or more investment properties said they’d buy a property sight-unseen if it fits all their criteria. However, first-time vacation rental buyers were more hesitant — just 16 percent said they’d buy a property without seeing it in person if it checked off all of the boxes.
In general, more vacation rental buyers have their eyes pointed South with 54 percent looking to purchase in the southern U.S. followed by 22 percent looking in the West. However, buyers are also much more likely to buy in the same region they live in with 91 percent of vacation rental buyers in the South concentrating their property search in their current region, followed by 72 percent in the West, 49 percent in the Midwest and 44 percent in the Northeast.
Overwhelmingly, vacation rental buyers want properties near the beach with 52 percent looking to purchase in beach markets up from 42 percent in 2021. After beach properties, lake properties (36 percent) are most popular, followed by urban properties (35 percent), mountain properties (26 percent), rural properties (19 percent) and buyers who are undecided on location (14 percent).
Single-family homes are the vacation rental property of choice with 66 percent of buyers seeking out these types of properties, followed by condos (35 percent), townhomes (27 percent) and multi-unit properties (22 percent).
When choosing where to buy vacation rental buyers are prioritizing rest and relaxation above other considerations with 73 percent of buyers reporting this as the most important factor in their decision. Following that consideration dining and entertainment (52 percent), sightseeing (50 percent), water activities (49 percent) and family-friendly locations (48 percent) were also important considerations.
What vacation rental buyers want from an agent
Vacation rental buyers are mostly looking for a real estate agent who can provide a bit of insight into the vacation rental industry in their market. Sixty-three percent of vacation rental buyers said such knowledge is an important factor in choosing an agent, whereas 57 percent said local market knowledge was important, 56 percent cited easy communication methods, 51 percent stated negotiation skills and 37 percent said an agent’s online tools were important.
Out of the top resources agents could provide potential vacation rental buyers, 60 percent said a cash-flow and return-on-investment analysis is in the top three. After that, 51 percent said an affordability calculator is valuable and 49 percent said short-term rental permitting and regulation information are most helpful.