After soaring sales of vacation homes in 2014, the numbers had nowhere to go but down, and so far this year, that has been the case. In summer home markets across much of the nation, home sales have not been as robust this year, but dollar volumes are significantly higher.
"The fact that dollar volume has not declined commensurate with transactions reflects that high-end buyers are still actively putting their money to work in Nantucket real estate," wrote Jennifer Shalley, research director and broker associate with Windwalker William Raveis real estate in Nantucket, Massachusetts.
Single-family home sales in Nantucket were down 24 percent in the first half of 2015 compared with the same period in 2014, but total dollar volume was down just 3 percent. The relative strength in dollar volume was driven in part by improving property values, but mostly by higher-end home sales, particularly of those above $10 million, according to Shalley.
The same is true in the Hamptons, on New York's Long Island. Overall, single-family home sales rose just 3.5 percent in the second quarter from the first quarter, but in the luxury segment (the top 10 percent by value), sales rose by twice that, according to Miller Samuel Real Estate's report for Douglas Elliman. Sales, however, were down across all price ranges from a year ago.
It is not surprising, given that vacation home sales hit an estimated 1.13 million last year, the highest amount since the National Association of Realtors began tracking the metric in 2003. That's a 57 percent increase from 2013.
"Affluent households have greatly benefited from strong growth in the stock market in recent years, and the steady rise in home prices has likely given them reassurance that real estate remains an attractive long-term investment," Realtors' Chief Economist Lawrence Yun wrote in a report last spring. "Furthermore, last year's impressive increase also reflects long-term growth in the numbers of baby boomers moving closer to retirement and buying second homes to convert into their primary home in a few years."
Vacation-home sales accounted for 21 percent of all transactions in 2014, according to the Realtors, the highest market share ever in the survey.
Some, however, dispute those numbers, claiming the overwhelming majority of so-called vacation homes are purchased specifically as investment vehicles. That may be, as more home buyers purchase multiple vacation properties to rent.
Robyn Erlenbush, broker owner of ERA Landmark Real Estate in Bozeman, Montana, says that although the peak summer travel season may be winding down, clients pursue their interest in vacation destinations throughout the year.
"We are seeing strong buyer demand for second, third and even fourth homes. The consumer who has discretionary income is coming back to real estate as an investment of choice. There is also an increasing demand from international buyers in prime gateway cities and college towns with amenities and recreational properties," said Erlenbush.
Buyers, however, are becoming more cautious about locations in general: Remote locations without amenities for children or grandchildren are becoming less desirable. As for price, that, as always, depends on the buyer.
"Price range is dependent upon the region, but in my market of Montana, for example, the under $500,000 market is very robust. Limited caution remains in the $2 million to $5 million range, but it really comes down to the individual property and the value it presents against the rest of the market," Erlenbush added.
While vacation home buyers are not as mortgage-dependent as primary-residence buyers, there is concern that interest rates will rise in the coming year, cutting into spending power.