The vacation-home market has boomed over the past year and is not likely to slow any time soon, even as the rest of the housing market starts to cool, Lawrence Yun, chief economist for the National Association of REALTORS®, told The Escape Home, a newsletter for second-home owners.
Even as companies bring employees back to the office, vacation homes will remain in demand, Yun said. Part of vacation homes’ rise in popularity has been attributed to the growth in remote work.
Overall, home sales are showing some signs of cooling. Many first-time home buyers are getting priced out of the market, Yun said. The median existing-home price for all housing types was $359,900 in July, nearly an 18% increase from a year ago. Mortgage rates are likely to increase, which could make buying even more expensive, he added. NAR predicts mortgage rates will rise to 3.5% by mid-2022, as the Federal Reserve likely will begin to reduce its bond purchases before the end of the year.
But vacation homes will remain a hot commodity. Rental prices for vacation homes will likely continue to rise too, Yun said.
“One near-certain aspect of the post-pandemic economy, when it comes, is the flexible work schedule,” Yun told The Escape Home. “It is very hard to envision five days a week in the office. Therefore, vacation-home sales will continue to move higher, this year, next year, and for the foreseeable future.”
Lawrence Yun is Chief Economist and oversees the Research group at the NATIONAL ASSOCIATION OF REALTORS®. He supervises and is responsible for a wide range of research activity for the association including NAR’s Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1.4 million REALTORS®.