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Demand for Vacation Homes Is Rising

Despite the economic meltdown caused by the COVID-19 pandemic, demand for vacation homes shot up by over 80% in 2021.

Despite the economic meltdown caused by the COVID-19 pandemic, demand for vacation homes shot up by over 80% in 2021. 

According to a report by Redfin, a technology-powered real estate brokerage. The demand for second home mortgage applications rose to 84% year-over-year (YOY) in January 2021. This was a decrease from the 118% YOY peak recorded in September 2020. But, it marked the eighth consecutive month that such mortgage applications recorded over 80% YOY growth. 

The demand for vacation homes more than doubled that of primary homes. As of January 2021, Primary residence applications were at 36%, down from the 65% YOY peak recorded in September 2020. The report released by Redfin drew on the analysis of mortgage rate lock data from Optimal Blue, a real estate analytics firm. 

The leading contributor to the growing demand for vacation homes is the rise in remote working because of the COVID-19 pandemic. With children learning from home and most white-collar employees working remotely. People are looking for homes where they can work comfortably. Many affluent Americans shifted their interest from spending time in densely populated cities to vacation homes. 

Another factor that has contributed to a sharp rise in demand for second homes is lower mortgage rates. Most property companies are lowering rates to adjust their pricing and cope with the economic slowdown.

Also, rather than checking in hotels, that may be expensive. Many domestic and international tourists prefer spending time in vacation homes.

Some benefits that come with vacation renting as opposed to Hotels include,

  • Cost-effective
  • Better security
  • The feeling of home away from home 
  • Privacy
  • Wide range of amenities within the same setting

More people are scrambling to enjoy the benefits of vacation rentals. This has resulted in an expansion of the vacation rental industry.

In a study published by iProperty Management, the total revenue from vacation rentals is likely to cross the $88 billion mark by 2023. This exceeds the 2019 overall global revenue. The study indicated that up to 71% of travelers with children cited the ability to cook their meals as the major reason that makes them prefer vacation rentals to hotels. 

The U.S. vacation market has attracted over 23,000 companies specializing in vacation renting. With the paradigm shift in accommodation booking from physical locations to online. It is easier for travelers to book vacation homes in the U.S. from any place in the World. 67% of travelers find it easier to book directly on a property website than using third parties. These are some factors that have sparked growth not only in the real estate sector but also in the vacation rental industry. 

In another report published by Statista, an online top-tier data analysis platform. Revenue generated from vacation rentals is likely to cross the $15,338 million mark in 2021. The revenue generated from vacation rentals is expected to grow at 7% yearly resulting in a market volume of $ 20,105 million by 2025. Vacation rental penetration in the U.S. market is projected to increase from 15.3% in 2021 to 18.3% by 2025.

The health measures spelled out by the World Health Organization (WHO) meant to curb the spread of COVID-19 have positively influenced the vacation rental market. Considering the danger posed by the COVID-19 pandemic. Vacation homes have become a perfect option for keeping social distance. 

Vacation rentals are ideal for remote working. They also offer a conducive environment for people who would wish to spend time away from their homes. It is against this backdrop that the U.S. vacation property market remains resilient despite the rattle effect caused by COVID-19.

As demand shifts to non-urban accommodation in the American market. Vacation homes renting has become appealing to many. With an increasing number of domestic tourists who prefer a home set up, vacation renting will remain profitable for most investors in America.

Many of the new vacation homeowners say they are happy with their decision to buy/rent a home. Most of them work remotely. The homes offer them a chance to disconnect from the usual workspace. They have achieved a better work-life balance while enjoying a better working and living environment. 

The vacation property business in the U.S. continues to attract more investors because of the ever-increasing demand experienced across the country.

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