3 Keys to Buying a Vacation Home

NEW YORK (MainStreet) — Are you wasting your weekends? With your crazy schedule, it's just too hard to plan ahead, and last-minute getaways can be expensive disappointments. The best retreats are booked, and the leftovers leave a lot to be desired. It seems more and more Americans are solving their diversion dilemma by snagging a vacation home bargain. Excluding institutional investments, vacation home sales rose nearly 30% last year to an estimated 717,000, up from 553,000 in 2012, according to the National Association of Realtors (NAR).

"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 says. "However, vacation-home sales are still about one-third below the peak activity seen in 2006."

The NAR reports the median vacation home price was $168,700, a nice number but up 12.5% from $150,000 in 2012.

There report indicates there are some key similarities among successful vacation home buyers:

  • Cash purchases are common, as 38% of buyers scored their getaway homes in an all-cash transaction.
  • Of the buyers who financed their purchase with a mortgage, large down payments are typical. The median down payment for vacation home buyers was 30%.
  • And perhaps the biggest inside edge for vacation home buyers: 42% of the homes purchased last year were distressed houses – either in foreclosure or purchased in a short sale.

NAR says the typical vacation home buyer last year was 43 years old, had a median household income of $85,600 and purchased a property that was a median distance of 180 miles from his or her primary residence. Nearly half (46%) of vacation homes were within 100 miles and 34% were more than 500 miles. Buyers also reported planning to own their recreational property for a median of 6 years, down from 10 years in 2012.