Ever since the Covid pandemic began almost two years ago, weary Americans hankering for a fun, but still safe, getaway have rejiggered their travel habits to jibe with the new normal.
Domestic road trips, national park visits and vacation home rentals and sales soared amid privacy and exposure concerns, and have remained popular even as pandemic restrictions have eased.
The vacation home market, in particular, has been vigorous and looks set to stay so, industry trackers say. In the first quarter of 2021, for example, vacation home sales rose 46% year-over-year, according to Realtor.com, and home sales in general should grow 6.6% in 2022.
“Given the pandemic, a second home offers a sense of security and personal space that a hotel or vacation rental may not,” said Joe Robison, data reporter at online moving resource MoveBuddha.com. “And with work-from-home protocols, the freedom to move between two different home offices could be tremendously attractive as it offers a change of scenery without the unknown variables of booking a vacation rental.”
Where are people buying or renting this winter?
Travel insurer Allianz Partners has found that 68% of Americans polled say a wintertime trip is important, and nearly as many (57%) intend to vacation domestically this year.
Rental platform Vacasa.com has compiled a list of the best places to buy a winter vacation home, based on cost and rental-rate returns, while MoveBuddha.com has put together a list of home prices in the best affordable — and more aspirational — winter holiday spots.
Get away then get paid
There are currently more than 5 million vacation homes in the country, according to the U.S. Census Bureau. In excess of 1 million of them are listed on major online platforms as short-term rentals, research firm AirDNA has found.
Americans shopping for winter retreats of their own are mixed in their motivations, said Shaun Greer, vice president of real estate and strategic growth at Vacasa. The firm’s 2021 Vacation Rental Buyer Report found 58% of shoppers wanted a rental they too could vacation at, while 42% wanted an income-generating investment first and foremost.
“It really depends on the buyer and their priorities,” he said. “Whatever the motivation, it’s critical for buyers to establish the financial goals of a rental property from the beginning and determine how often they plan to use it.”
The more you use your vacation home yourself, especially during periods of high-demand such as holidays, the less income you’ll earn, Greer noted, “so it’s important to factor that into projections and the overall budget.”
Daily rental rates are up this year in top markets, so gross revenue in the short-term rental market is up — although capitalization rates on a bit lower than normal, Vacasa found. Here are the top markets based on cap rate and median home price:
Some of the top contenders are — such as Newry, Conway and Banner Elk — are less well known across the country. That’s due to rise in popularity of destinations within driving distance of major cities since Covid hit, Greer explained, and it will likely stay that way.
“We’ve seen rising demand for vacation destinations within a three-hour drive of major metro areas, as road trips become the preferred way to travel — and that’s especially true for mountain and beach areas where people can be outdoors and there’s less density,” he said.
Even as urban and more traditional (and crowded) spots start to bounce back, “I think we’ll continue to see vacation home investment and guest demand in those locations,” Greer added.
Similar stuff, better price?
MoveBuddha found much the same in its research, according to Robison.
“Since the start of the pandemic, there is certainly a great deal of anecdotal evidence about urban dwellers in New York City or Chicago choosing to split their time between the big city and a second home in more remote locations in upstate New York and the Midwest,” he said. “For these types of second-home buyers, it is easy to understand the appeal of accessible, low-key and inexpensive locations.”
As part of its own survey of the top 20 U.S. cities for winter getaways, MoveBuddha ranked destinations in terms of home purchase costs, from most affordable to least. Places were also grouped into four interest categories: snow and slope, for skiers and other winter sports fans; sun and sand, for beachgoers and the like; trails and trekking, for hikers and walkers; and cozy and cuddly, for bookworms and other culture and comfort mavens.
Snow-and-slopes entrants Ironwood, Michigan, and Hurley, Wisconsin, top the affordability ranking, with average home prices of $58,990 and $75,285, respectively. That compares to almost $1.23 million on average in ski mecca Breckenridge, Colorado, which tops the list.
Robison said the site used various metrics adjusted for population so the survey would capture less well-known locations that still offered great winter vacation options.
“Ironwood, for instance, is located within 20 miles of four ski resorts — the same density as Breckenridge, [and] Corpus Christi has roughly the same rate of beaches per capita as Honolulu,” he said.
Upstate New York cities like Utica and Syracuse might be less desirable for full-time living due to relatively poor job markets, but “this isn’t an issue for a vacation home,” Robison added.
“Surely there is more to do in the likes of Burlington, Honolulu or Breckenridge,” he said. “But Ironwood, Utica and Corpus Christi have significantly cheaper housing markets, and for several years, smaller cities have proven to appeal to millennial homebuyers in particular for this very reason.”
Robison noted that the increased popularity of lesser-known destinations for second homes likely won’t come at the expense of more established locales.
“We wouldn’t argue that the Breckenridges and St. Petersburgs of the world are losing steam while the Ironwoods and Corpus Christis are gaining it,” he said. “Rather … more people, in general, are interested in owning a vacation home, even if it isn’t in a location with a lot of clout.”
In addition, keep an eye on Alaska, Robison said.
MoveBuddha found a spike of 38% in interest in the state in its 2021 migration report.
“We can’t tell if these are permanent moves or vacation homes, purchases or rentals but the interest is certainly there,” he said.
While the state’s seen sustained growth as a vacation destination, Robison added, it “is not a winter vacation destination for the faint of heart.”
Indeed, when shopping for a “winter” getaway spot, it’s important to gauge possible year-round appeal, noted Greer at Vacasa.
“When looking to invest in a vacation rental, you should consider what those summer vs. winter guest demand drivers are,” he said. “In good news for vacation rental homeowners, places like Lake Chelan in Washington, Gatlinburg, Tennessee, and Big Sky, Montana, have strong all-season appeal.”