Buying a home in the US is less affordable than ever before, but a vacation property can offer a big payoff for those who have the money.
The most popular vacation destinations can still deliver decent returns for rental-home owners, but rising prices mean the best capitalization rates, a measure of real estate returns, are in less-recognizable locations, according to new research by rental management company Vacasa.
The best place to buy a US vacation home in 2022 is Lake Anna, Virginia, a spot about 80 miles from Washington, DC, which that wasn’t even on Vacasa’s Top 25 list last year. The median home sale price was $435,000 and annual gross rental revenue was $81,293, for a cap rate of 12%.
The top spots also happen to all be beachfront, with places like Port Aransas, Texas and the Palm Coast in Florida offering relatively cheap homes that can fetch strong rental revenue. A home in the Palm Coast, for example, costs a median of $354,000, with annual gross rental revenue estimated at $59,482, according to Vacasa.
“After several years of historically high demand, coupled with historically low inventory, the real estate market is stabilizing. That’s good news for buyers who have more opportunity to regain some leverage in what is still, predominantly, a seller’s market,” Shaun Greer, Vacasa’s senior vice president of sales and marketing, said in an email.
Waterfront properties are attracting higher rental returns across the country as buyers increasingly look for beachside homes, according to Vacasa, with a 10% increase in such requests at the start of the year compared to the same period last year. Sunny beaches were also among the most-searched criteria by people looking to rent vacation homes this year, according to the report, with younger buyers now constituting the majority of holiday home purchasers.
This article was provided by Bloomberg News.