WOODARD: Vacation home sales down, investments up

Listen to this article

While vacation home sales dropped a bit during the past year, they remain at the second-highest volume in the last decade.

At the same time, sales of investment properties have increased for the first time in five years, according to an annual survey of residential homebuyers released by the National Association of Realtors. Mirroring the strong price growth seen throughout the United States, the median sales price of both vacation and investment homes surged in 2015.

“NAR’s 2016 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2015, found that vacation-home sales last year declined to an estimated 920,000, down 18.5 percent from their most recent peak level of 1.13 million in 201,” the report noted.

“Investment-home sales in 2015 jumped 7.0 percent to an estimated 1.09 million from 1.02 million in 2014. Owner-occupied purchases jumped 15.9 percent to 3.74 million last year from 3.23 million in 2014 – the highest level since 2007 (3.93 million).”

The report pointed out how the study was structured.

“Sales estimates are based on a national online survey including responses from over 2,000 U.S. adults who purchased a residential property in 2015, and exclude institutional investment activity.”

The NAR chief economist says vacation sales took a sizable step back in 2015, but still came in at the second-highest amount since 2006 (1.07 million). “Baby boomers at or near retirement continue to propel the demand for second homes, although headwinds softened the overall volume of vacation sales last year,” he said.

“The expanding pool of buyers amidst a dwindling number of bargain-priced properties led to tighter supply and fewer sales and caused the price of vacation homes to rise. Furthermore, the turbulence that hit the financial markets the second half of the year likely seized some would-be buyers’ available cash.

“The median sales price of both vacation and investment homes soared in 2015. The median vacation home price was $192,000, up 28.0 percent from $150,000 in 2014. The median investment-home sales price was $143,500, up 15.3 percent from $124,500 a year ago.”

Q: To what extent are home sales increasing?

A: The National Association of Realtors on April 20 reported substantial home sales increases.

“Bolstered by big gains in the Northeast and Midwest, existing-home sales bounced back in March and remained slightly up from a year ago,” the NAR said.

“Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 5.1 percent to a seasonally adjusted annual rate of 5.33 million in March from a downwardly revised 5.07 million in February. Sales rose in all four major regions last month and are up modestly (1.5 percent) from March 2015.”

Lawrence Yun, NAR chief economist, says home sales had a nice rebound in March following February’s uncharacteristically large decline. “Closings came back in force last month as a greater number of buyers – mostly in the Northeast and Midwest – overcame depressed inventory levels and steady price growth to close on a home,” he said. “Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well.”

Q: How much gain in price are home sellers experiencing in today’s market?

A: Here’s a report recently issued:

“RealtyTrac, a source for housing data, released its March and Q1 2016 U.S. Home Sales report, which shows that U.S. home sellers in March on average sold for $30,500 more than they purchased for, a 17 percent average gain in price – the highest average price gain for home sellers in any month since December 2007 at the onset of the Great Recession.

“The RealtyTrac Home Sales report is based on publicly recorded sales deeds collected and licensed by RealtyTrac in more than 900 counties nationwide accounting for more than 80 percent of the U.S. population.”

WOODARD has been writing about real estate news and trends since 1971 and is the resident storyteller at the Ronald Reagan Presidential Library in Simi Valley, Calif.