In the market for a vacation home? As many of the nation's housing markets have recovered and are even booming, we're now seeing more significant growth in this secondary niche market. Vacation home sales jumped 29.7% to an estimated 717,000 in 2013, up from 553,000 in 2012, according to a new survey from the National Association of Realtors. NAR bases its estimates on responses from households and excludes institutional investment activity.
The numbers show vacation homes as a niche housing market that's been growing and still has room to boom even more. NAR economists note that vacation home sales are indeed strong, but still about a third below peak levels seen in 2006.
Sales of vacation homes accounted for 13% of all transactions last year, their highest market share since 2006.
People buy vacation homes for a number of reasons, which tend to include lifestyle (i.e., actually vacationing in the home), potential retirement avenue and income opportunity. NAR's survey highlighted lifestyle as the primary motivation.
While the vacation niche is booming, the investment niche is shrinking. As vacation home sales increased, pure investment sales fell in 2013. NAR's analysis showed investment sales were down 8.5% to an estimated 1.1 million last year from 1.21 million in 2012. And owner-occupied purchases climbed 13.1% to 3.7 million from 3.27 million in 2012.
Meanwhile, the portion of overall sales that were investments fell to 20% in 2013 from 24% in 2012.
Market conditions certainly point to a continued rise in vacation home purchases in 2014 with a continued slowdown of investment purchases. Depending on local dynamics, this may be a stellar year for finally buying that home near the lake you've always wanted.