Similar to many other aspects of the housing industry, demand for vacation homes has increased since the onset of the COVID-19 pandemic. A perfect storm of remote work capabilities, virtual schooling, and the urge to escape highly populated areas last year allowed many homeowners to retreat to their existing vacation homes or motivated potential buyers to invest in a second property.
Adam McAbee, senior vice president of advisory at Zonda, in October gave a presentation on the vacation housing market’s evolution from pre-COVID, to during the pandemic, and now to today’s new normal. Through his research, he was able to identify vacation market trends, the impact the pandemic had on buyer profiles, and what the future may hold for vacation homes and communities going forward.
Market Trends
McAbee analyzed sales and pricing statistics in a number of vacation market destinations across the United States to understand how the market evolved over the past few years. He looked at sales in 111 neighborhoods across 25 states, broken down by categories including 54 ocean, 30 mountain, 19 golf, and eight lake/river communities.
“Using the aerial imagery function on our Zonda app, I focused on identifying existing developments that tend to attract vacation home buyers,” McAbee explains. “Sometimes it was subdivisions or high-rises and other times it was the mountain side surrounding the ski slopes at a ski resort, as opposed to the whole town. My goal was to get as specific as possible.”
Since 2010, annual closings for all four categories showed steady increases over the years. It wasn’t until the onset of the pandemic, or the period from 2019 to 2020, did the closing data reveal sharp increases.
“There was a huge pop in 2020, and 2021 is also showing very strong on an overall level,” continues McAbee.
When compared with the first nine months of 2020, sales are up 54% overall in 2021. As the largest analyzed category, the ocean products displayed the biggest increase from 2019 to 2021, with year-to-date closings jumping from under 8,000 in 2019 to roughly 9,000 in 2020 to over 13,000 in 2021.
As a result of increased demand and sales, pricing for vacation homes has also risen, and McAbee found rising prices in all categories. Looking at the 2021 year-to-date data alone, prices are up 31%.
Buyer Profiles
To understand how buyer profiles shifted from before the pandemic to today, McAbee surveyed sales agents at 12 different vacation home communities across the U.S.
“Every one of the surveys were either face to face or over the phone, and while 12 sounds like a small number, most of these, if not all, are actively selling in new well-established vacation communities,” McAbee says. “My intention was to be as quantitative in the responses as I could be.”
According to his data, the median age of vacation home buyers is getting younger. Pre-COVID, the median came out to be 58, while today the median age leans more toward 50.
With a younger buyer, the life stage also changes. McAbee is seeing more families with school-aged children and less empty nesters. Pre-COVID, 70% of vacation home buyers were empty nesters, but that has since decreased to 55%. Families with children at home accounted for 30% of buyers before the pandemic, and that percentage has increased to 45%.
The intended use of the property shifted slightly from before the pandemic to now. Historically, 93% of buyers used the vacation house as their secondary home, but that percentage has dropped to 78% today. Only 7% of buyers used it as their primary residence pre-COVID, and that number has increased to 22%.
“We called it a ‘temporary primary.’ It was their primary residence, but only temporarily,” McAbee explains. “They lived there for a little while, while the kids could do online school, and then are going back or have gone back.”
The typical number of weeks used per year has increased from 11 pre-COVID to 16 today. “My experience with the number of weeks used is that people generally use their home between six and 12 weeks a year,” he says. “So, that is impacted by COVID. People are using the homes more than they were before.”
Because the families are younger, have more people, and they are spending more time in the home, buyers are looking for more space. The desired number of bedrooms increased from an average of 3.3 pre-COVID to 4.3 today, but could include an office for remote work.
Payment type between cash and financing shifted slightly. According to McAbee’s findings, there’s been an increase in cash buyers, jumping from 68% pre-COVID to 74% today. Financing decreased from 32% pre-COVID to 26% today.
To find out why people have made the decision to buy a vacation home, McAbee asked agents to rank eight primary motivators. Refuge from COVID/congestion ranked as the top reason, followed by the ability to work remotely, getting older, and increasing prices.
McAbee has four predictions for 2022 and beyond. If they haven’t already, he believes “temporary primary” buyers will continue to make their move back home now that schools are open. Luxury projects will continue to sell as long as the economy remains strong. Prices will continue to rise, but not forever. And lastly, the product will evolve to include more bedrooms, office options, and better kitchens.
