By now, you’ve likely heard some mindboggling stories about the recent housing market. Ruthless bidding wars. People blindly signing contracts without having set foot in the home — or even the town where the home is. Cash offers hundreds of thousands over the asking price. Well, a significant part of this boom is second home (or vacation home) purchases.
Some staggering second-home stats:
- Mortgage applications for second homes rose 84% year over year in January 2021 according to an analysis by real estate firm Redfin.
- Actual second home purchases rose 46% year over year in March 2021.
- The median price tag for homes in seasonal towns grew 19% year over year in December 2020.
Those numbers are almost unbelievable when you realize that, pre-pandemic, demand for primary homes and second homes had been growing at pretty similar rates. But as travel restrictions loosen and interest rates stay low, buyers are snatching up second homes — or maybe third or fourth homes — twice as fast as they are new primary residences. How did this get so crazy and where, specifically, are people buying their homes away from home?
Many affluent Americans with remote-work-conducive desk jobs have chosen to ride out the pandemic away from dense cities. How many friends do you know who immediately retreated to their mountain or beach house once the lockdowns began? And how envious were you of them? Well, more and more people want a piece of that vacation property pie … a pie that’s being gobbled up faster than anyone could have imagined.
As the Relocation Director at Charlotte, NC-based firm Dickens Mitchener, Catharine Pappas helps place all of the company’s second home referrals — and they’ve had hundreds. “The pandemic has fueled the second home market and the exodus from high-cost, dense urban areas to lower-cost, more suburban areas,” she says. “Clients are craving space, outdoor entertaining areas, and room to host close friends and family. The second home market has been driven by clients who want a place to work remotely and escape with their family,” she adds.
And because these hungry and hopeful second-home owners are now able to work anywhere, they can spend more time in said second home, thus boosting its bang for their buck. Fresh findings by Realtor.com show a new crop of off-the-beaten-path destinations that are relatively affordable, a stone’s throw from larger cities, and, unsurprisingly, near water or mountains. “The majority of our clients want to be within driving distance of their second home,” Catharine adds. “We have sent almost 200 clients to the beaches and mountains all over North and South Carolina.”
But with inventory so hard to snatch up, many are going against the grain and to lesser-populated areas adjacent to the hot spots we know and love. These “spillover markets,” as Mansion Global calls them, are the new wave of second homes. Think Fort Lauderdale instead of Miami; rural Nevada instead of Lake Tahoe proper; Mexico Beach instead of Rosemary Beach; Snowmass instead of Aspen. In general, buyers are getting more space for their money when they move away from the high-ticket vacation spots of decades past.
Marion, North Carolina, for example, is one of the hottest second-home areas in the country according to the same Realtor.com report. It’s quaint and close to Asheville, but without the Asheville price tags. While Marion’s median home price in March was $344,500, Asheville’s was $492,000. Another place that topped the list is Ruston, Louisiana, and its $242,000 medium home price. A hunting, fishing, and nature lover’s dream in the Sportsman Paradise region of Northern Lousiana, the second home sales percentage in Ruston has risen nearly 20% year over year.
While being driving distance is important to some, others are looking to get further out into the wild west. Less glamorous but still every bit as picturesque mountain towns like Edwards, Colorado, are gaining second homeowners who like the proximity to winter and summer sports but without the prices and fuss of places like Aspen. “Fresh air, green trees, and a slower pace of life are what our clients are craving,” Catharine adds. Because of Dickens Mitchener’s affiliation with Leading Real Estate Companies of the World, they work with the top 1% of agencies in every market to be able to send clients to places like Montana and Wyoming.
Many people are looking in areas with low property taxes, and Alabama had the lowest in the country last year. Lake Martin is a popular lake for Southerners to buy second homes. Until now, the total number of residential waterfront sales at Lake Martin has never exceeded 500 units sold annually. Not even close. But the total sales for the last 12 months ending in March 2021, was 503 units. The record before that was 364 — one of the highest ever — during the same period the previous year ending in March 2020, according to Lake Martin Realty’s April 22 market report. If you don’t have a calculator handy, that’s an increase of 38.2%
Ann James, a relator with Kentucky Select Properties in Louisville, Kentucky, weighs in about a different second-home mindset — one that’s bringing buyers from bigger cities to medium-sized ones. Places like Nashville, Austin, New Orleans, Birmingham, Charlotte, and Louisville are seeing many interested buyers from bigger cities across the country who want suburban acreage with close-by culture.
“Buyers are definitely rethinking what they want and need,” Ann says. “With more people able to work remotely, we are seeing an influx of buyers from much larger cities who are looking for the convenience of the city but with a lower cost of living.” Many of such people — perhaps they’re horse or bourbon lovers — are interested in listings like this one in Louisville’s Highlands neighborhood. Speaking personally, Ann adds, “After the past year of social distancing, it is so nice to see people out and about. I would definitely buy a home where I can easily walk up to a coffee shop or bookstore and help support the local economies.”
If you’re looking to buy a second home, Ann says, “It’s all about what you want to do when you’re there. I’ve sold second homes to folks wanting to be in the active areas of town with farmers markets, restaurants, parks, and something to do at any time of day or night, but I’ve also helped clients purchase homes nestled into wooded acreage to allow for quiet privacy away from it all. My best advice is to know your purpose and, of course, your spending power. This market is fierce, so be ready to jump!”
Similarly, parts of Tennessee are seeing an influx in second-home buyers. RE/MAX Homes and Estates Lipman Group realtor Mike Bonagura weighs in on Why Middle Tennessee Makes a Great Second Home Location. “We have so many wonderful sporting events, amazing restaurants, world-class golf courses, outstanding universities, and so much more,” adds Mike. “You can come to Nashville, spend a few weeks here every year, and do something different each time.”
If you’re in the market, good luck out there … and we’ll be awaiting our invite!
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