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Remote Work Drives Interest in Second Homes

The National Association of Realtors (NAR) has released its 2021 Vacation Home Counties Report, which found that during the period of the second half of 2020 and through April 2021, there was a surge in the interest of vacation homes, causing a spike in the market.

In 2020, the share of vacation home sales to total existing-home sales increased to 5.5% (5% in 2019). Vacation home sales rose by 16.4%, outpacing the overall growth in existing-home sales of 5.6%. From January to April 2021, the share of vacation home sales to total existing-home sales rose to 6.7%. Vacation home sales jumped 57.2% year-over-year compared to the 20% year-over-year growth in total existing-home sales.

"Vacation homes are a hot commodity at the moment," said Lawrence Yun, NAR's Chief Economist. "With many businesses and employers still extending an option to work remotely to workers, vacation housing and second homes will remain a popular choice among buyers."

According to the 2021 Vacation Home Counties Report report, median existing-home sale prices in vacation counties also grew faster than in the rest of the country, increasing 14.2% compared to 10.1% in non-vacation home counties. Properties in vacation home counties typically remained on the market longer in 2020 than those in other areas (59 days compared to 30 days). Nevertheless, homes largely sold at a faster pace in vacation home counties compared to the prior year by 13 days, versus just eight days in non-vacation home counties. Overall, the median number of net movers into vacation home counties increased from 78,114 in 2019 to 98,279 in 2020.

For the analysis, NAR classified a county as a vacation home county if the vacant housing for seasonal/occasion/recreational use accounted for at least 20% of the housing stock. Based on the U.S. Census Bureau’s 2019 American Community Survey five-year estimates, NAR identified 323 out of 3,143 counties (including independent cities) as vacation home counties, representing 10.3% of U.S. counties.

Pandemic-related remote work scenarios were a primary driver of interest in these vacation areas, with many now having the flexibility to work from home.

"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.

NAR found the top 10 counties for vacation homes are:

  • Lee County, Florida
  • Oscoda County, Michigan
  • Swain County, North Carolina
  • Collier County, Florida
  • Dukes County, Massachusetts
  • Alleghany County, North Carolina
  • Garrett County, Maryland
  • Barnstable County, Massachusetts
  • Alcona County, Michigan
  • Macon County, North Carolina

Among the nine U.S. divisions, the South Atlantic (comprised of Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia and the District of Columbia) witnessed the strongest sales growth, with home sales up nearly 31% in 2020 in the vacation home counties. The second highest sales growth was in the Middle Atlantic division (New Jersey, New York and Pennsylvania), with home sales typically up 27.8% in 2020 in the vacation home counties. Third in line was the West South Central division (Arkansas, Louisiana, Oklahoma and Texas) where sales typically increased by 25.7% in 2020 in the vacation home counties. In the New England division (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont), sales generally climbed 25.3% in 2020 in the vacation home counties.

A market short on inventory can also be found in the vacation home space, as just like median-priced homes, vacation home sales are also seeing buyers resorting to a number of tactics to close the deal. A recent Zillow report found that at least half of listing agents surveyed encountered an all-cash offer, an escalation clause, submission before the offer review date, a higher down payment, or more earnest money when reviewing offers. That same study found 28% indicating they were planning to offer more than a 20% cash payment, 21% planning to increase their earnest money deposit, and 17% planning to either offer above asking price or all cash. Nearly half were prepared to offer up to 10% above the asking price.

"Realtors all over the country have indicated that buyers in a position to pay in all cash are doing just that," said Yun. "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.”

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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