NAR Survey: More Competition on the Way for VR Owners
The annual "National Association of Realtors (NAR) Investment and Vacation Home Buyers Survey" came out on March 29, 2012. The good news is that the housing crisis is easing. The bad news is that more competition is on the way for those of us currently offering vacation rentals.
The NAR survey found that the number of homes purchased by investors rose 65% during 2011 to 1.2 million, accounting for 27% of all home sales. In 2010, in contrast, investment properties accounted for 17% of all sales. Many of the sales in 2011 were all-cash deals, leading to the conclusion that the market is being driven by investors with cash who, after sitting on the sidelines since 2008, have decided that housing prices are at or near the bottom.
Also, as NAR Chief Economist Lawrence Yun said in the NAR press release, “Rising rental income easily beats cash sitting in banks as an added inducement. In addition, 41% of investment buyers purchased more than one property.”
And speaking of rentals, the number of homes bought as second or vacation homes rose 7% in 2011 to 502,000. This accounted for 11% of all transactions, compared to 10% in 2010. And according to the NAR survey, 42% of vacation-home purchases were made with cash.
In fact, we can be even more specific, thanks to a proprietary survey that HomeAway arranged to piggyback onto the NAR survey. Here are some of the highlights from HomeAway's March 29, 2012, press release:
Conclusion: Let’s Get Busy!
It is certainly likely that at least some of the 502,000 vacation homes purchased in 2011 were previously offered as vacation rentals. But it is also likely that many were not. Shown nearby is a table with the results of HomeAway-sponsored surveys in previous years.
Years ago, when we were writing computer books, we predicted that the online world would be the focus of a Time Magazine cover story by 1984. We were wrong. The “electronic universe,” as we called it in those pre-Internet days, wasn’t featured on the cover until 1994, 10 years later. Something similar appears to be happening regarding vacation rentals.
The four big VR-advertising sites that HomeAway bought in 2005 and 2006 to form its core offering were founded between 1995 and 1998, 14 to 17 years ago. Huge developments in the online world (and in the world of real estate) have taken place since. It may just be that the vacation-rental industry is finally coming into its own. Don’t let this rocket take off without getting aboard!