The idea of to buy a vacation home is more appealing than ever, but is this the right time to invest in one? As housing markets shift and travel habits evolve post-pandemic, many are asking whether now is the moment to secure a home-away-from-home or hold off for better conditions.

Let’s look at the pros, cons, and current market trends so you can make a smart, informed decision.

Vacation Home Market Trends in 2024

After a pandemic-driven boom, the demand for vacation homes is beginning to cool. However, despite the slowdown, prices remain elevated in many desirable markets.

Demand is Easing — But Prices Remain High

According to mortgage analytics firm Optimal Blue, vacation home sales surged during the peak of the pandemic but have since dropped by 15% compared to 2021. While this may suggest a market cooldown, it doesn’t necessarily mean homes are easier to buy — particularly in high-demand regions where inventory is still low and prices remain elevated.

In fact, second homes tend to be more expensive than primary residences. In February 2022, the median vacation home price was $429,000, compared to $392,000 for all homes.

Many Sales Are Cash-Based

Data doesn’t always reflect the full picture. A large share of second-home purchases are made in cash, especially by high-net-worth buyers, meaning demand may be stronger than statistics imply.

Is It a Good Time to Buy a Vacation Home?

The answer depends on your financial situation, location, and goals. Here are some reasons why now could still be a good opportunity.

1. Potential Rental Income Offsets Costs

If you plan to rent out the property part-time, that passive income could cover:

• Your monthly mortgage payment
• Property taxes and insurance
• Maintenance and cleaning services

Some lenders even factor in anticipated rental income when determining how much you qualify to borrow — increasing your buying power.

2. High Travel Costs = High Local Rental Demand

With flight prices rising and inflation squeezing travelers’ budgets, many people are choosing drivable getaways over expensive vacations. That means:

• Stronger demand for vacation rentals
• Better occupancy rates
• Higher nightly rental rates in desirable areas

This could make your vacation home a strong investment property in the near term.

3. No Rush — More Flexibility When Buying

Unlike buying a primary residence, shopping for a second home comes with less urgency. You can wait for the right location, price, and amenities — without compromising on what you really want.

What to Consider Before You Buy a Vacation Home

Before jumping into a second-home purchase, it’s important to evaluate how the property fits into your lifestyle, budget, and long-term goals. A thoughtful approach can help you avoid costly surprises and make the most of your investment.

1. Distance from Your Primary Residence

If this will be a true vacation home, try to find something within 2.5 hours of where you live. The closer it is, the more likely you’ll actually use it — and the lower your travel costs will be. This is especially important with current gas prices.

2. Buy a Vacation Home Before Your Primary?

Interestingly, some millennials are flipping the script by buying rental vacation homes before they purchase a primary residence. Why?

• Limited inventory in their local markets
• Ability to start building equity
• Potential rental income and appreciation
• Occasional personal use as a weekend escape

If you’re in a stable rental situation, this strategy could help you get a foothold in real estate.

Is Now the Right Time for You?

Ultimately, whether now is a good time to buy a vacation home depends on your:

• Budget and ability to qualify for a second mortgage
• Investment goals (rental income, appreciation, personal use)
• Desired location and current market conditions

If you find the right opportunity — and the numbers work — don’t hesitate. Good properties don’t last long.

Ready to Explore Vacation Home Financing?

We’re here to help you navigate the second-home buying process. From pre-approval to finding the right mortgage product, our team can help you make a smart investment that aligns with your lifestyle and goals.

Contact us today to get started!