Vacation home prices skyrocketed last year amid strong demand as a shortage of properties held back sales.
Beach houses, lakeside cabins and other getaways accounted for 16 percent of all transactions in 2015, down from 21 percent in 2014, according to a March survey of homebuyers from the National Association of Realtors (NAR).
The problem was supply — or the lack of it. Too many buyers chased too few properties for sale, sending the price of a typical vacation home soaring 28 percent from the year before, to $192,000, and pushing less-affluent house hunters out of the market.
“The expanding pool of buyers amidst a dwindling number of bargain-priced properties led to tighter supply and fewer sales and caused the price of vacation homes to rise,” said NAR chief economist Lawrence Yun.
The entire housing market is being held back by shortage of properties for sale. Homebuilders aren’t breaking ground fast enough to accommodate a growing population.
More houses are being snapped up and held by long-term investors, too. As the recovery has gained traction, investors have made up a smaller share of the market and their purchases have slowed every year since 2011. But that trend reversed last year, when investors bought more houses than they did in 2014, NAR’s survey found.
With suitable houses few and far between, homeowners are staying put instead of trading up or down. That means even fewer lawns sprouting for-sale signs.
When we surveyed Redfin agents last month, more than half said the lack of inventory was the market’s biggest challenge. Nearly 63 percent of agents said would-be sellers feared they wouldn’t be able to find a replacement house to buy. Buyers are forced to compete for the few houses available.
For vacation property, demographic trends are making the market even more challenging as baby boomers preparing for retirement shop for second homes.
