RISMEDIA, April 8, 2008-The National Association of Realtors® numbers are out, and at first glance, they’re discouraging. According to NAR’s annual Investment and Vacation Home Buyers Survey, vacation home sales dropped 30.6 percent between 2006 and 2007. What’s more, median sale prices are down 2.5 percent. If you’ve recently purchased a vacation home (or maybe even not so recently), you might have a sinking feeling right now that you’ve made a mistake. Was it a good investment after all? Absolutely, says Christine Karpinski. Read between the lines and you’ll see that the drop really represents a change in buying patterns within the market and not an economic disaster.
“You have to put these numbers in perspective,” says Karpinski, director of Owner Community for HomeAway.com and author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment (Kinney Pollack Press, 2007, ISBN: 0-9748249-9-2, $26.00). “First, vacation home sales were at an all-time high in 2005 and 2006. So yes, sales have declined-but the ’06 boom skews the numbers a bit. It’s all relative.”
What really happened last year, says Karpinski, was that speculators left the market. Only 3 percent of those surveyed said they plan on holding their properties for a year or less, compared to the nearly 20 percent who gave that response in earlier years. Speculators tend to artificially depress prices since they can usually afford to take a hit when they need to offload a property-a situation that’s bad for the typical vacation home owner who wants a stable marketplace.
This vast exodus of speculators means that more buyers than ever are in this for the long haul. If you have your eye on a cute little beach cottage or mountain chalet, in other words, you have the luxury of taking your time and thinking things through before you sign on the dotted line.
“So if you are just a regular Joe, just looking to buy a vacation home-not looking to ‘get rich quick’ in other words-this is the perfect environment in which to take the plunge,” says Karpinski. “And the NAR survey confirms this: 77 percent of people surveyed said they feel that now is a good time to buy.”
Here’s another interesting development: A whopping 25 percent of vacation home buyers surveyed said that they plan to rent out their vacation homes to others. This statistic has doubled in the past two years. Clearly, notes Karpinski, more and more people are starting to discover one of the biggest hidden benefits of vacation home ownership.
“Those of us who are seasoned rental owners have realized that the rental aspect is the key to having the lifestyle benefits of vacation home ownership without all the financial burdens,” she says. “It seems that 25 percent of the buyers surveyed have figured out our secret-renting is the easiest way to offset some of the costs and even generate some extra income.”
There’s another big plus to renting out your home, adds Karpinski: It can provide a welcome infusion of cash when things get tight financially.
“One HomeAway.com member tells me that the rental income from his vacation home has been a lifesaver in our sluggish economy,” she notes. “He owns a retail store, and business has been slow lately. But his vacation home is proving to be a huge asset. It has more than doubled in value since he purchased it in 2004-and that’s with it being appraised in today’s not-so-great housing market. And right now he’s clearing about $20,000 a year from rent after his expenses are paid, an amount that makes up for the income shortfall from his store.”
Christine Karpinski is the author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment (Kinney Pollack Press, 2007, ISBN: 0-9748249-9-2, $26.00) and Profit from Your Vacation Home Dream: The Complete Guide to a Savvy Financial and Emotional Investment (Kaplan, 2005, ISBN: 1-4195069-1-9, $19.95).
Her books, combined with her seminars, media appearances, and website (OwnerCommunity.com), help thousands of people purchase and manage their vacation homes. Today she serves as director of Owner Community for HomeAway, Inc. (HomeAway.com).
For more information, visit www.HomeAway.com.