Vacation Homes Are Bringing In More Than Just R&R

BLOG VIEW: With the winter safely in the past and summer finally here, relaxing vacations and tropical getaways are on the minds of many a weary worker bee and family in need of a break from the routine. With the economy and real estate market continuing to move in a positive direction, more property owners and investors are seeking out vacation homes to either enjoy as their own personal sanctuary or to net a tidy profit as a rental.

A recent report in the Wall Street Journal explored this rise in the market and the lucrative results it seems to be bringing. "Economists note that the vacation-home market was a beneficiary of last year's big gains in the stock market and rising home values, bringing buyers more wealth and confidence," WSJ comments. That combination gives rise to the classic 'wealth effect' in which people feel more wealthy and, therefore, more willing to spend. More households also sought to diversify their wealth by transferring their gains from stocks and other investments into real estate."

A survey by the National Association of Realtors (NAR) confirms these statements.

‘Vacation-home sales jumped 29.7 percent to an estimated 717,000 last year from 553,000 in 2012,’ the NAR report states, also noting that vacation-home sales made up 13% of real estate transactions last year, which is the highest rate since 2006. Couple that with the upswing of the current real estate market, and it appears that the vacation home may be the next sought-after property to bring in a profitable return.

‘Growth in the equity markets has greatly benefited high net-worth households, thereby providing the wherewithal and confidence to purchase recreational property,’ NAR Chief Economist Lawrence Yun commented.

MarketWatch also recognized this surge, as well as the favorable income potential. ‘For one, it's still possible to purchase homes in popular vacation spots at decent prices, and mortgage rates are still relatively low. Plus, the homes can be income generators, if their owners rent them out when they're not using them,’ MarketWatch notes. ‘Twenty-three percent of vacation-home buyers who participated in the Realtors' annual survey on the topic said they planned to rent out their newly purchased home to others.’

As with considering purchasing any property, the rule of thumb applies to vacation homes as well: location, location, location. Those looking to acquire their own personal getaway, as well as buyers seeking to rent, need to consider a host of elements before signing on the dotted line.

‘Before closing on the deal, be sure to explore the intended area for ease of travel, diversity of local offerings, and other factors that will entice potential renters and vacationers,’ advises the Huffington Post in a recent article. ‘This assessment is critical for the eventual resale value of the home – and for the rental revenue stream." MarketWatch echoes this idea, advising, "To maximize rental profitability, buyers may want to seek out homes in some of the most popular tourist spots – and the markets where vacationers are most likely to be interested in a home rental.’

So where is the best place to purchase a vacation property? Most people automatically think ‘beach locale’ though there are some that view the mountains as the prime getaway destination. Not surprisingly, the NAR report reveals that most vacation properties are being acquired in the nation's sunniest surroundings, stating, "Forty-one percent of vacation homes purchased last year were in the South, 28 percent in the West, 18 percent in the Northeast and 14 percent in the Midwest." Hot spots such as the affluent Hamptons/North Fork area rose 16.6% in 2013 for vacation-home sales over the previous year, according to The Real Deal.Â

Luxury homes near exotic ocean venues that can double as vacation getaways have been frequenting the auction block for the past few years. Many owners of these sprawling estates looking to liquidate assets have turned to the auction method of sale for its accelerated marketing plan and quick closing process. Vacation residence seekers have gotten an eyeful by shopping the auction circuit – where homes such as the renowned Water Falling Estate in Hawaii were recently sold.

So what are the top locations to buy a vacation home? The NAR report lists the seven best places as follows:

1. Kissimmee, Fla.
2. Cape Cod, Mass.
3. Poconos, Penn.
4. Outer Banks, N.C.
5. Destin, Fla.
6. Myrtle Beach, S.C.
7. Ocean City, Md.

Obviously, the majority of these getaway locales is near an ocean. Though No. 3-rated Pocono Mountains are quite a ways from the Atlantic, this area does offer a plethora of beaches on panoramic lakes, not to mention various outdoor activities. The research and numbers are all pointing in the same direction – if you're thinking about buying that piece of recreational real estate, head toward sandy beaches, a breathtaking body of water and lots of outside action. That home away from home could be the most successful purchase you make this year.

Ori Klein is founder and president of, a niche marketing website dedicated exclusively to real estate auctions. Klein has more than 20 years experience in real estate marketing and technology, focusing on the auction sector of the real estate industry.

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