Over the past decade, the property market for second homes and online travel operations have transformed significantly. A survey developed by real estate adviser Savills and HomeAway found that recent buyers are prioritizing the purchasing of second vacation homes for financial benefits rather than for personal enjoyment.
“In a low interest rate environment, investors are seeking out income generating assets,” said Paul Tostevin, associate director of Savills world research. “Today’s second home buyers want properties to work for them financially and they are increasingly looking not just to cover costs but to turn a profit.”
The shift in property dynamic has proven to be extremely new. The study found that in 2000, eight out of 10 second home owners had never rented their properties to tourists. More recently, research found that more than two-thirds of second homeowners rent out their vacation homes to relieve all or part of their ownership expenses.
In 2007 and 2008, the property demand for second homes fell and the national housing market declined due to the global financial crisis. Within recent years, while smaller and cheaper properties lead the market with buyers pursuing potential for income and profit, market growth has resumed. Approximately one-third of all rental home owners cover expenses with rental income, while another third generate a profit. Research found that the average gross yield across the sample stands at 6.4 percent, or 3.9 percent after costs, while excluding taxes.
Also, the accessibility of online marketplaces like Airbnb for brief rental accommodations has provided means for which owners to rent out their properties more easily to travelers.
“Over the past 10 years, the online travel industry has changed significantly. Staying in a vacation home has transformed, moving from an alternative way to travel to a preferred way to stay,” said Christophe Pingard, vice president of EMEA, HomeAway. “With the rise in the popularity of the category, vacation rentals are not only attracting more travelers, and perhaps most significantly, a new generation of younger travelers accustomed to booking homes over hotels for their trips.”
HomeAway and Savills found that within the United States, owners in Florida account for 14 percent of second homes in the nation, ranking No. 1 on the list for ownership. Following the Sunshine State is California at 7 percent, and North Carolina at 4 percent.