The world of real estate is ever-evolving, and in recent years, the concept of owning a second home has gained substantial traction. Many see it as a strategic move to diversify their asset portfolio and build equity in a growing property market. Knowing second home statistics offers potential and current investors a comprehensive, holistic look at the market so they can make informed financial decisions.
Whether you’re a seasoned investor or just starting, understanding the dynamics of the second home market is crucial for long-term success in the industry.
General Second Home Statistics
In this section, we’ve compiled critical statistics on second homes, offering insights into market trends over recent years. Our focus encompasses a range of key areas, including the number of second home housing units, median prices, sales volumes, and other pivotal data to enhance your understanding of the market’s dynamics.
1. Second homes comprise 5.11% of U.S. housing units
Estimates for how many homes in the U.S. are classified as second homes vary, but the most recent data suggests this number sits at around 7.15 million as of 2020. According to the National Association of Home Builders (NAHB), this figure represents approximately 5.11% of the total housing stock in the nation.
2. Second home median price is around $435,000
According to the most recent Pacaso Second Home Market Analysis for Spring 2022, the median price for all second home mortgage rate locks during Q2 2022 was $435,000, representing a 19% increase year-over-year (YOY). In the luxury category, the median price was approximately $1.4 million, which remained relatively flat compared to the previous year. This data indicates a robust demand in the second home market, especially in the luxury segment, with notable price stability despite broader economic changes.
3. 16.4% increase in vacation home sales during the pandemic
The National Association of Realtors (NAR) released a report highlighting a significant surge in vacation home sales due to the COVID-19 pandemic. Key findings from this second home data include a 16.4% increase in vacation home sales in 2020, surpassing the 5.6% growth in total existing home sales. The share of vacation home sales rose to 5.5% in 2020, up from 5% in 2019, and increased to 6.7% in the first four months of 2021.
4. Vacation home sales surge by 57.2% YOY, driven by remote work trends
This trend is attributed to remote work policies and the subsequent demand for vacation housing. The report notes a remarkable 57.2% year-over-year jump in vacation home sales from January to April 2021, compared to a 20% increase in total existing home sales. Vacation home counties experienced a higher sales rate and faster median existing home price growth of 14.2%, compared to 10.1% in non-vacation home counties.
5. U.S. vacation home sales drop by 75% from peak levels due to inventory shortage
Recent data indicates a significant shift in the U.S. vacation home market. According to Reuters, sales of vacation homes have plummeted by nearly three-quarters compared to their peak three years ago, primarily due to a shortage in inventory.
Second Home Location Statistics
The location of a second home is a critical factor that can significantly influence its value, appeal, and purpose. Our analysis in this section delves into second home location statistics, shedding light on popular regions.
6. Arizona, South Carolina & Florida are the top states for second homes
Based on the Pacaso analysis of second home transactions up to May 2023, the top three counties for second homes are Maricopa County in Arizona, Horry County in South Carolina, and Lee County in Florida. Maricopa County leads with the most transactions, where the average second home price is $679,000.
7. Ocean City leads with 81% of second home mortgages
The top three counties for second homes, as detailed in the SmartAsset study, are Ocean City, NJ, Barnstable Town, MA, and Naples-Marco Island, FL. Ocean City leads with over 81% of mortgages for secondary homes, with a median home value of just over $365,000. Barnstable Town follows with nearly 62% of mortgages for second homes, with homes averaging around $500,000. Naples-Marco Island ranks third with 53.91% of mortgages for secondary homes in an area with a population of just under 386,000.
8. Sevier County, Tennessee, sees a 9.7% rise in second home prices, averaging $574,000
Tennessee, especially Sevier County, saw a 9.7% increase with an average second home price of $574,000. Attractions like Gatlinburg, the Great Smoky Mountains National Park, and Dollywood contribute to its popularity as a second home destination.
9. The second home market in Trigg County, Kentucky, is up 9.3%, averaging $409,000
Kentucky, with areas like Trigg County, experienced a 9.3% increase in second home markets. The average price for a second home here is around $409,000. Its appeal includes the Land Between the Lakes Recreational Area, offering a serene and natural setting.
10. Florida leads with over 1 million second homes, nearly 11% of the U.S. total
Interestingly, Florida alone boasts the highest concentration of second homes, with over 1 million, accounting for nearly 11% of all vacation homes nationwide.
11. Over 10% of housing in 891 U.S. counties are second homes
In 2020, a detailed analysis at the county level across the United States highlighted a notable prevalence of second homes nationwide. The study found that in 891 counties across 49 states, at least 10% of the housing stock was made up of second homes. Furthermore, in certain counties, over half of the housing stock was composed of second homes; these were spread across 15 states, including notable concentrations in six counties in Michigan, five in Colorado, and four in Wisconsin.
12. Counties exceeding 25,000 second homes are found in or near metro areas
The counties with the most significant numbers of second homes, often exceeding 25,000 units, are primarily found in or near major metropolitan areas. Substantial clusters of second homes are located in states like Arizona, Florida, California, Massachusetts, and New York, known for their appeal as prime second home destinations.
13. 80% of investors are looking for second homes outside the U.S.
Interestingly, the Robb Report found that many investors are looking to purchase second homes outside of the U.S. About 29% are looking for properties in Europe, 28% are in North American destinations outside the U.S., and 23% are in the Caribbean.
Short-term Vacation Rental Statistics
The short-term vacation rental sector is witnessing transformative growth as second home purchases have increased, evidenced by compelling statistics that shed light on market dynamics and trends. As the industry navigates through shifts in traveler preferences and economic impacts, these figures offer valuable insights into its trajectory.
14. The average number of short-term rental listings is 1,424,441
Since 2019, the number of short-term rental listings on the market has increased by about 21.1%. As of recent statistics from 2023, there is an average of 1,424,441 short-term rental listings on the market, according to Dotloop. These numbers indicate an increase in not only short-term rentals but also investors purchasing second homes to use toward building equity and profit.
15. Projected growth of $8,907.1 million by 2026 in the short-term vacation rental market
The short-term vacation rental market is poised for significant expansion, with expectations of reaching a market valuation of $8,907.1 million by 2026. This surge is driven by a growing preference for short-term rentals among travelers, who increasingly seek accommodations that provide personalized and unique experiences, diverging from the conventional hotel stay.
16. 18% of American adults prefer vacation rentals post-pandemic for safer stays
The COVID-19 pandemic has significantly influenced traveler preferences, leading to an 18% increase in American adults favoring short-term vacation rentals over traditional accommodations. This trend underscores a shift toward seeking safer, more controlled lodging options, demonstrating the potential for continued growth within the short-term rental sector and, therefore, the second home market.
17. 45% of hosts rely on short-term rentals for financial needs
About 45% of hosts consider their short-term rental ventures critical for fulfilling their financial obligations. This statistic highlights the significant economic benefits of short-term rentals for investors, individuals, and families who utilize their second home properties for temporary lodging.
Pros & Cons of Owning a Second Home
The allure of a second home is undeniable, but it’s essential to weigh both the benefits and drawbacks before making such a significant commitment. Read the pros and cons below before deciding if a second home fits your real estate goals.
PROS | CONS |
---|---|
Escape and relaxation: A second home offers a welcome respite from daily routines, providing a serene sanctuary for rejuvenation and enjoyment. | Financial burden: The additional mortgage, insurance, and maintenance costs can place a strain on finances, requiring careful budgeting and financial planning. |
Investment potential: Depending on location and property type, second homes can appreciate in value over time, serving as a solid investment for the future. | Limited use: Unless rented out frequently, second homes can sit vacant for extended periods, leading to higher maintenance costs and potential security concerns. |
Income generation: Renting out the property through platforms like Airbnb or Vrbo can generate income to offset costs and potentially create a passive income stream. | Location concerns: Carefully consider factors like accessibility, distance from primary residence, and local amenities before committing to a location. |
Family memories: Creating unforgettable experiences and fostering family bonds in a special setting are invaluable benefits of owning a second home. | Unexpected expenses: Natural disasters, repairs, and other unforeseen events can add unplanned costs to the ownership experience. |
Frequently Asked Questions (FAQs)
Yes, owning a second home can be highly beneficial. Some of the best places to have a second home can be coastal Florida, the scenic mountains of Colorado, or vibrant New York City. They can serve not just as personal retreats but also as potential investment opportunities. These areas often experience consistent property value appreciation and can generate lucrative rental income, especially during peak tourist seasons. Additionally, a second home in these sought-after locations can serve as a long-term plan for retirement or lifestyle change.
As of 2020, second homes accounted for about 5.11% of the total U.S. housing stock, with an estimated total count of 7.15 million second homes. This suggests that a significant portion of the population, particularly among wealthy Americans, owns a second home.
The most popular locations for second homes in the U.S. are Florida, California, and New York. These areas are known for vacation and recreational activities. Specific areas like Marinette-Iron Mountain WI-MI and Salisbury-Cambridge MD-DE are also notable for their high percentage of second homes.
Bottom Line
The second home market presents a unique segment within the real estate industry. While recent trends show a decline in sales and changes in market dynamics, the allure of owning a second home remains strong, especially among the affluent. With financial incentives, lifestyle choices, and future planning considerations, the second home market continues to be a significant and evolving part of the real estate landscape.