US Vacation Property Investment at Record Levels

Holiday homes have become the preferred category of US property investment according to a recent survey. Vacation homes sales have increased to the point of overtaking investment purchases. Despite the change in tendency, both investor types are unanimous that now is the time to buy property in the US.


The 2015 Investment and Vacation Home Buyers Survey compiled by the National Association of Realtors (NAR) reveals that trends have changed among American property investors. Holiday homes now rank as the preferred investment – investors bought 1.13 million holiday homes last year, their highest level ever and ahead of the 2006 record. This translates to a year-on-year increase of 57.4 per cent on 2013. In contrast with this hike, purchases of US property for pure investment fell to 1.02 million, down from 1.1 million in 2013.


The survey only includes US citizens buying residential property, discounting both investment by foreign buyers and institutional funds. However, it reveals important trends within US property and importantly, highlights the all-round confidence in the market.


Insight into holiday home investment

Purchases of holiday homes in the US account for 21 per cent of the total with single family homes a clear favourite with a 54 per cent share of all transactions. Foreclosure properties accounted for nearly half of all purchases.


In terms of location, properties in the south feature in top position with 46 per cent of buyers choosing states such as Florida and South Carolina. 40 per cent of investors opted for a holiday home on the beach.


One third of those surveyed said their purchase was for holiday purposes with 19 per cent planning to use their investment as a permanent home and 13 per cent buyers to benefit from price appreciation. The overwhelming majority of holiday home buyers (86 per cent) said that they believed now is the time to buy.


Commenting on the “astonishing growth” in holiday property investment, Lawrence Yun, NAR Chief Economist said the results show that the tandem of strong growth in the stock market and steady rise in house prices give “reassurance that real estate remains an attractive long-term investment”. He highlighted the growth in investment by baby boomers who are about to retire and therefore seeking a second home.


Insight into investment property characteristics

Despite losing its top position to holiday homes, buying US property for pure investment purposes still makes up 19 per cent of transactions. As is the case with holiday home purchases, foreclosure properties feature as the preferred type and single family homes account for 61 per cent of the total.


The southern regions also rank as the preferred investment location with 37 per cent choosing this part of the US. However, when it comes to investment property, buyers opt for suburban and city areas with 58 per cent investing in these areas.


Rental income is the rationale behind the majority of buyers of US property for investment with 37 per cent claiming they made buy-to-let purchases. 17 per cent said they invested to make the most of low prices and 15 per cent wanted to benefit from price appreciation.


Source: National Association of Realtors

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