More buyers want returns rather than recreation
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The traditional purpose of owning a second home for family getaways has been replaced by a desire for rental yields according to a new survey.
Two thirds of second home owners now rent them out for all or part of the year, to make a return on their investments.
This marks a shift from less than 20 years ago when 8 out of 10 owners of second homes never rented them to travelers, the survey by international real estate advisors Savills and vacation rental firm HomeAway revealed.
"In a low interest rate environment, investors are seeking out income generating assets," says Paul Tostevin, associate director, 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."
A third of all owners cover costs with rental income, and another third make a profit. The average gross yield across the sample stands at 6.4%, or 3.9% after costs, but excludes taxes.
Condos gain in popularity
The changing second homes market is also seeing a larger share of condos being bought, 34% of those bought in 2017 compared to 25% ten years’ ago.
The average price paid for a second home last year was $291,000, 37% less than a decade ago.
Florida is the top destination for purchasers followed by California. Americans, Canadians, and British are the top 3 owners of American second homes.
Americans are the top foreign purchasers of second homes in Costa Rica, the Northern Caribbean, Mexico and Canada.
