Buying Frenzy Heats Up in Second-Home Market
November 9, 2020
Homes are selling much quicker than they did a year ago, and sales of resort and second homes are no different. “Properties are moving fast,” Gay Cororaton, senior economist and director of housing and commercial research at the National Association of REALTORS®, said Friday during the virtual 2020 REALTORS® Conference & Expo.
In September, 68% of vacation homes sold in less than a month, according to the REALTORS® Confidence Index Survey. Historically, about 30% sell that quickly, she said. “It’s a pretty amazing uptick compared to past years,” Cororaton added. Sales of resort and second homes accounted for 6.3% of overall home sales in the third quarter, up from about 4.5% in the second quarter, according to the RCI.
One consequence of the pandemic has had a clear influence on these sales. “Working from home is a positive factor in demand for vacation homes,” Cororaton said. Many people who can work remotely are choosing to do so in their second or vacation homes, she said.
Price increases are following those sales. In the third quarter, prices in vacation-home counties rose by about 32% year over year. Seventy-nine percent of these counties experienced year-over-year price gains. NAR defines a vacation-home county as one in which seasonal housing accounts for at least 20% of stock.
Sales in vacation-home counties increased 48% on average year over year in the third quarter; overall, 81% of vacation-home counties saw a year-over-year sales increase. Areas with the biggest boosts were in the far Northeast; the Upper Midwest, including Minnesota, Wisconsin and Michigan; and the Southwest, mostly in Arizona, Colorado, New Mexico, and Utah.
While commercial land sales have been relatively flat during the pandemic, sales of recreational land increased by 5% in the third quarter, according to NAR’s Q3 Commercial Real Estate Market Survey. Developed residential land was up 6% during this time period as well.
An unsurprising result of the pandemic is the reduction in the share of international buyers in the second-home market. Their share of purchases in September was down about 4%, but that’s being made up by domestic buyers, Cororaton said.