2016 Second Home Market
The 2016 second home real estate market will soon start to pick up, especially for lake home sales. Brokers around the country are optimistic about this year's market, but 2014-15 will be a tough act to follow. Vacation home sales reached near record levels in 2014, according to sources at the National Association of REALTORS. NAR estimated that sales toped 1.13 million in 2014, which was up over 50 percent from 2013. That, obviously, had an affect on second home prices for 2015, but we have yet to see complete data on last year's sales.
There are several factors that may have influenced such an amazing soar in this market. We saw the stock market bounce back for a while, giving people approaching retirement an opportunity to pull their funds out and buy the second home they've been patiently waiting to purchase. Many of these second homes will likely become full-time residences as people enter into retirement.
According to NAR, second homes/vacation homes made up over 20 percent of all transactions in 2014. That number undoubtedly dropped for 2015, and we are not likely to be anywhere near those kinds of numbers for 2016 due to the drop in the stock market and considering we are in a presidential election year. NAR's data showed that the median sales price of both vacation and investment homes declined in 2014. The median vacation home price was $150,000, down 11.1 percent from $168,700 in 2013. The median sales price for 2015 likely increased due to the lack of inventory; 2016 will likely see a drop in sales and prices.
One of the second home x factors that nobody is talking about is gas prices. The plummet in gas prices at the pump may have an influence on sales for 2016. People are not as enthusiactic about purchasing a second home and visiting that second home two or three weekends per month when gas prices spoil the fun. It's data that we aren't likely to find, but it's a conversation that often comes up with potential second home owners who dream of purchasing that home in one of their favorite vacation destinations.
Other statistics of note provided by the National Assocation of REALTORS included the percentage of distressed homes purchased for a second home. According to NAR 45 percent of all second homes bought in 2014 were distressed. They were either a foreclosure or short sale. These are surprising numbers and also an indicator why fewer foreclosure investment properties were purchased the past couple years. We have other buyers in the market who are purchasing for entirely different reasons and may have been more likely to outbid the investor buyer to get what they want.