Vail Daily column: Buy an investment property or vacation home?
We live in the Midwest and love to come to Vail, summer and winter. My husband has said we should buy an investment property here and rent it out so we can write off our trips out here. I say we should buy a vacation home we can use now on our trips and possibly rent it a little to defray the costs. Then, hopefully, when we retire we could move to the property and live here year round. He says that does not make economic sense. What do you say?
Dear Soon to be Vailites,
I am not going to say who is right or wrong, as I am not sure there is a right or wrong … but I can say you are in the majority of how Americans are purchasing in today’s market. According to the National Association of Realtors, “vacation home sales boomed in 2014 to above their most recent peak level in 2006, while investment purchases fell for the fourth straight year,” according to an April 15 survey they conducted with residential home buyers.
Vacation home sales went from 717,000 nationwide in 2013, to 1.13 million nationwide in 2014, a 57.4 percent increase. This is the largest number of vacation home sales ever, or at least since NAR started the survey in 2003, 12 years ago.
Why is this happening? Lawrence Yun, the chief economist for NAR, gives the following explanation for why the vacation home sales have nearly doubled in one year: “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. 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.”
Every knowledgeable, hard working real estate agent in the Vail Valley that I know is as busy as they have been as far back as they can remember right now. The interest rates are still great, vacation home prices have not risen like the home prices in Denver and the Front Range, so you still can get a “good buy” here.
Maybe not a steal, but you can still buy at market value without having to pay inflated prices. Historically, our vacation homes have turned out to be good investment homes due to the potential for appreciation. In the meantime, they bring a lot of joy and memories. Once again, let a great real estate agent show you around and run some numbers for your husband to help give him a comfort zone on historical sales in the area. We look forward to having you become a part of our community!
Joan Harned is an owner and broker for Keller Williams Mountain Properties and heads up Team Black Bear, her own real estate team. Harned has been selling real estate in Eagle County for 27 years, is a past chairman of the Vail Board of Realtors, past Realtor of the Year, past director on the Great Outdoors Colorado Board and a member of the Luxury and Land Institutes. Contact Harned at Joan@TeamBlackBear.com, 970-337-7777 or http://www.SkiAndTeeHomes.com.
Is it our time management skills that need a little work, or is the enemy time compression?