The cost of buying and maintaining a vacation home is high. You'll pay another mortgage, plus property taxes, insurance and utilities, just like you do with your primary residence. We got vacation rental data for 265 U. S.
markets from AirDNA, a leading short-term rental analytics company that tracks Airbnb and Vrbo listings. Our analysis of the data reveals that 18 markets are experiencing stable or declining rental rates, and another 16 markets are seeing rate hikes of more than 50%. Increases in vacation rental rates are a combination of factors. Home values are rising; the National Association of Realtors reports median home prices up 24% compared to this time last year.
Second, vacation rental companies are recovering revenues lost due to the pandemic. Third, according to AirDNA monitoring, vacation rental listings have not returned to pre-pandemic normality and are lagging behind demand. Demand for revenge trips and supply shortages are driving costs. Finally, Airbnb and Vrbo occupy dominant positions in the vacation rental economy.
In addition to last year's lower profits, revenge trips incentivize these companies to subsidize fewer bookings without fear of losing potential customers, something that many call the end of the millennial lifestyle subsidy. With an average daily rate increase of 28%, the West Coast largely reflects the national pace, and with a 36% drop in holiday interest, this region lags behind the national average. Much of the West Coast lifted COVID restrictions later than the East Coast, contributing to a slower recovery. However, there are deviations; Joshua Tree and Redding, California, have daily rate increases of more than 70% and only 13% less vacation interest this year. Buying a vacation home may seem like a costly investment, but it can be worth it if you plan to rent it and collect passive income. No matter what you decide to do with your new vacation property, make sure you take the time to thoroughly research the desired location and the current housing market.
For example, if your vacation home will be in a popular area for retirees, you may need to make your property more accessible. You should also take the time to look at the rental market in the desired location if you plan to rent your vacation home. The best places to buy a vacation home in New York are perfect for getting away from city life and earning extra rental income. Montauk has a beach so beautiful it won't surprise anyone that it's one of the best places to buy a vacation home in upstate New York. He says buying a vacation home, in particular, offers tax incentives, possible property appreciation, higher rental income (compared to long-term leases), ideal meeting locations, and the freedom to renovate or furnish at any time. Unless you plan to supervise your vacation home (and if you rent, manage, and book rentals) yourself, which may be close to a full-time job depending on location and demand, it's often best to hire a property management service.
In addition to your monthly mortgage payment, the cost of insuring your second home may be higher than that of your main home. Determine if you have the financial resources to renovate your future vacation home to fit your specific needs and preferences. In vacation rental markets, Americans are waking up to a new landscape as they continue to book trips this summer. Home values in nine of the top 10 most popular vacation towns appreciate faster than typical U. markets. When looking for places for a vacation home, set a realistic maximum of how much you are willing to offer in a home.
In short, for people who want to constantly return to the same place, buying a vacation home is a smart bet. But even when some people are thinking about a possible return to the office, the demand for vacation homes continues unabated. With a vacation home, you can receive tax benefits for mortgage interest and property taxes if the home is used as a secondary residence.