Maybe it’s the frothiness of the One Percent, or maybe the drop in oil prices just hasn’t sunk in. But people are buying vacation homes more than ever, the buyers are younger, and the vacation properties are further from the primary home. We know this from a terrific Austin-based company called HomeAway. The vacation rental guru celebrates its 10th anniversary this month. Because HomeAway has more than one million listings, they’ve seen it all! They have witnessed vacation rental owners take what was seemingly a “cottage industry” and become micro-entrepreneurs, turning their second homes into significant profit-drivers, funding college tuition, future retirement homes and family vacations. The vacation home market is good for business!
To celebrate, they reviewed a decade’s worth of data to compile a list of five trends driving meaningful change in the vacation rental ownership industry. Yeah I know, most people would open a bottle of bubbly, but the HomeAway folks really like pulling data, which they have plenty of. here are five key insights of the current vacation home market:
1. Vacation home buyers are getting much younger (now just 43-years old)
HomeAway has tracked the purchase trends of vacation home buyers with the National Association of Realtors for the last ten years and has found that the median age of vacation home buyers has dropped twelve years from 55-years old in 2004 to 43-years old, currently.
2. Intent to rent increasing among vacation home buyers
23% of vacation home buyers cite renting to travelers as the primary reason for purchasing the home, which has more than tripled (7%) when compared to ten years ago. That said, even if the primary reason isn’t to rent their home, 89% of newly acquired vacation homes will be rented within the first year.
3. Owners shift to “best of both worlds” mentality
Consistently, the primary reason for purchasing a vacation home is for a personal or family retreat. However, owners are learning they can monetize their asset through HomeAway and in return cover 75% or more of their mortgage by renting it out just 18 weeks out of the year (leaving them plenty of time to enjoy the home as well). As a result, more owners are listing their homes with the goal to cover all of their expenses (73% in 2014 vs. 46% in 2008) or generate a profit (11% in 2014 vs. 3 in 2008).
4. Vacation retreats owned farther and farther from home
Very interesting. Ten years ago, the average vacation home buyer purchased their property only 49 miles from their primary residence. Owners now purchase vacation rentals at a much farther distance from home, which has grown to an average of 322 miles over the past five years. Of course, that’s still driving distance.
5. Property managers are on the rise (again)
In the beginning, the only way to rent your vacation home was through a property manager, but now – through sites like HomeAway – more owners rent directly to travelers. Those who make the most money through their vacation home treat it like a business, but 75% of HomeAway vacation rental owners already have jobs of their own and exercise their option to turn to property managers (29% in 2008 vs. 41% in 2014) to manage their rentals.
Isn’t that interesting? Do you think that most people purchase a vacation home to be a family retreat, only to learn that it just isn’t that easy to get away?
And how close should your vacation home be? 50 miles or 400? Let us hear from you!