Increased financial wealth and low mortgage rates boosted demand and the prices of vacation homes, according to the National Association of Realtors®’ (NAR) 2019 U.S. Vacation Home Counties Report.

Over a five-year period – from 2013 to 2018 – the median sales price in vacation home counties increased at a slightly higher pace (36%) compared to the pace of increase of all existing and new homes sold (31%). Median price increases occurred in both expensive and inexpensive areas. The counties with the highest price increases during the five-year span were in three states: Pennsylvania, which includes Pike and Monroe counties; Wisconsin, which contains Price and Washburn counties; and Massachusetts, which includes Nantucket.

The figures are telling, especially when compared to data from 10 years prior, according to Lawrence Yun, NAR’s chief economist. “As of 2018, household net worth reached an all-time high of $100.3 trillion – that’s nearly double from a decade ago when wealth declined during the recession,” he says. “Some of this tremendous growth in wealth, although concentrated, increased demand for vacation homes.”

Although most homebuyers purchase a residence as a primary home, that’s not the case for all buyers. A portion purchase a second home use as a general family vacation spot, tenant rental, means to gain equity or – upon retirement – a future primary residence.

The NAR report uses the U.S. Census Bureau’s American Community Survey data to examine “vacation home counties,” which it defines as counties where vacant housing for seasonal, recreational or occasional use made up 20% or more of the county’s total housing stock.

Of 3,141 U.S. counties, 206 counties (6.6%) were identified as vacation home counties.

NAR also identified the most and least expensive and affordable vacation home counties, and exactly who is able to afford to purchase a second home.

Top vacation home counties

The top 26 vacation home counties – ones with the largest percentages of vacant seasonal, recreational or occasional use housing units – include those nationally-known sites as well as local destinations. Though less populated, this group includes a large number of counties along northern Michigan, Wisconsin and Minnesota. Leading the list are:

  • Massachusetts (Nantucket and Dukes, 56%; Barnstable, 41%)
  • New Jersey (Cape May, 51%)
  • Colorado (Grand, Summit Eagle, Jackson and Pitkin, 51%)
  • Wisconsin (Vilas, Lincoln, Langlade, Forest and Oneida, 43%)
  • Michigan (Roscommon, Ogemaw, Gladwin, Iosco and Arenac, 42%)

“Some people may visualize the common popular vacation destinations in the U.S. when considering a vacation home, such as counties in Florida or California,” says Yun. “And although those locations have their share of vacation properties, we see that some homeowners prefer some of the other counties, including those in Massachusetts and New Jersey. These areas are often known for harsh weather conditions, but are popular nonetheless.”

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Some other notable vacation home counties are found in Maine, Pennsylvania, New York, New Hampshire, Maryland, Delaware, North Carolina, Vermont, Florida, California, Georgia, South Carolina, Arizona, Idaho and Oregon.

Most expensive vacation home counties

The top 25 most expensive vacation home counties included well-known summer and winter getaways. Using Black Knight property records data, Nantucket, Mass., emerged as the most expensive vacation home county in 2018, with a median sales price at $1 million. Following were other counties in Massachusetts, including Dukes, a portion of which includes Martha’s Vineyard.

Other places of note were:

  • Colorado, which contains counties like Pitkin, Eagle, Summit and Grand that are popular Rocky Mountain summer and winter destinations
  • Florida, which includes Monroe and Collier, known respectively for the Florida Keys and Naples
  • California, which contains the counties of Mono, Alpine and Inyo, among others, all of which are near Yosemite National Park
  • Arizona, which includes Coconino county, home of part of the Grand Canyon

Taking into account the 2018 median sales price and the income of a typical family in the top 25 most expensive areas, the typical family – that is, a family earning the median income only – would be unable to afford to purchase a home in these counties.

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Least expensive vacation home counties

Data from Black Knight property records finds that the median price for a vacation home was usually less than $100,000. The most inexpensive vacation home counties were found in:

  • Maine (Aroostook, Piscataquis, Somerset, Franklin, Oxford, Washington and Waldo)
  • New York (Chenango and Franklin)
  • Pennsylvania (McKean, Venango, Clarion, Elk, Potter, Clearfield and Jefferson)
  • Missouri (Miller)
  • Michigan (Gogebic, Lake, Arenac, Iosco and Cheboygan)

The expected annual mortgage payment (30-year mortgage with a 20% down payment for a home purchased at the median sales price) is less than $5,000. Under such a scenario, the mortgage payment would account for less than 10% of a typical family’s income it they purchased a vacation home in one of the top least-expensive vacation destination locations.

Other findings

Buyers purchasing a vacation home usually pay all-cash or, if they opt to obtain a mortgage, typically make a 20% down payment. Recent low mortgage rates made it more affordable to borrow to purchase a second home.

Cape May, New Jersey, topped the list of vacation home counties where second home mortgages accounted for the largest share of home purchase loans. Also on that list, among other areas, was California (Alpine and Mono counties), New York (Hamilton and Delaware counties), and Colorado (Grand and Summit counties).

Most of the borrowers who obtained mortgages for second homes earned around $100,000 or more. Among borrowers for second homes, the estimated mortgage payment to income ratio ranged from 4% to 12% in the vacation home counties.

© 2019 Florida Realtors®