- There are fewer vacation homes available to buy and rent.
- More people are making the choice to live in their second-home full time.
- The hottest amenities: Internet connectivity, work from home spaces, and an outdoor oasis.
As COVID-19 spread, many people made a beeline to their more isolated second homes or vacation rentals to hunker down and stay safe.
Slowly, the idea that those destination homes would be short-term gave way to the notion of making them a permanent residence. People enjoyed the safety, space, fresh air, and outdoor recreation at their retreats. They found efficiency working remotely and having their children learn virtually. And many found it propitious to buy with low interest rates and a strong stock market.
“Buying a house is a feel-good purchase, and it became the right time after many put it off,” says Diane Saatchi, associate broker with Saunders & Associates in East Hampton, N.Y.
Since the pandemic started, Mimy von Schreiner with John R. Wood Properties in Southwest Florida, has had three clients purchase vacation homes who then made them permanent residences.
Whether homes are for full- or part-time use, all the demand has led to a dearth of inventory, now exacerbated by the spring buying season and many people planning their summer vacations.
Von Schreiner says inventory in her market is down 56% from a year ago, which she attributes to frenzied pandemic sales and rentals, an expanded pool of younger buyers, and existing homeowners staying put.
Deb Martin, CEO of ERA Cape Cod Real Estate in Denis, Mass., has also seen inventory shrink for similar reasons. But those reasons are compounded by another trend beginning before the pandemic: retirees not selling as they once did to move near grandchildren or head to senior-living facilities.
Because of these tough market conditions, agents must help clients by encouraging them to prioritize their wish lists, stay on top of what’s available, and communicate often. These five questions will help real estate pros guide the discussion.
1. How far from your current home are you willing to go?
Many buyers and renters now are willing to travel farther to find the right home and a lower price. “Many don’t anticipate going back and forth as frequently, if at all,” says Jennifer Grimes, whose Red Cottage Inc. in Grahamsville, N.Y., offers vacation rentals, and her Country House Realty represents homes for sales in the Catskills.
In the last year, she’s seen her rural Sullivan County become the epicenter of escape for people coming from New York City, 110 miles away. “It was last to the party in popularity after better-known Dutchess, Ulster, and Orange counties, but interest has surged as a destination and demand has far outpaced supply,” she says. To meet demand in recent years, Grimes has added 10 agents.
Architect Mike Aziz, AIA, a partner at New York City-based Cooper Robertson, an architecture and urban design firm, says many of his firm clients will drive farther, as well—two to three hours from a major city, especially for a primary residence.
The same is true on the West Coast where Chris Neighbor, president of SummerHill Homes in San Ramon, Calif., sees huge interest in his firm’s infill townhouses from tech workers leaving the expensive Bay Area and their tiny apartments.
“The average tech employee no longer works on a campus for 14 hours a day. They can get more space,” he says.
In other markets, particularly for long- and short-term rentals, some people are now willing to drive to rural sites once under the radar, such as parts of Kentucky, Michigan’s upper peninsula, and the area around Deep Creek Lake, Md., says Jeffrey Breece, whose San Francisco-based Beyond Pricing offers a revenue management platform for short-term rental owners and managers.
2. Does peak season matter to you?
Many locations are experiencing extended rental seasons with bookings made further out than pre-COVID-19. For example, in Florida, salesperson Angela Waldrop with Dale Sorensen Real Estate in Vero Beach, has seen bookings extend beyond the typical April 30 cutoff into summer. “Except for a minor blip when the coronavirus emerged, we’ve not had a break. Many people also book for longer three- to six-month periods,” she says.
Jason Milovich, broker-owner of Bluefish Vacation Rentals in southwest Michigan, about 74 miles from Chicago, has also seen lines blur between high and low seasons.
“The busiest rental time used to be from Memorial Day through Labor Day, followed by a shoulder through November. But it has stayed busy from last December until now,” he says.
The difference in rental costs has also diminished between the high season, weekends, and holidays, and the low season and weekdays, Grimes says. Even the idea of a best time to buy has vanished.
“Sales now happen at all times if there’s inventory,” Waldrop says.
3. What’s your price range?
With little inventory, houses often sell at full price or above, and oftentimes on the day listed. “Buyers tire of repeatedly missing out, and many overpay to make a sale work,” Grimes says. As an example, she cites a property listed at $425,000 that went 35% higher for $575,000 without an inspection three days after hitting the market. It was seen by 25 potential buyers, and the winning bid was all cash.
In von Schreiner’s Florida market, average sales prices in January were up 18.2% from a year ago, she says. Neighbor has seen listings in his California area climb 20% above the asking price with as many as eight to 12 offers.
Rental costs reflect a similar uptick. “Many are going 25% above the (normal) price. A pool brings a premium,” Breece says. In Waldrop’s Florida market, luxury homes have been renting “nonstop” since the start of the pandemic, she says, for $20,000 to $35,000 monthly, or 30% above a year ago.
4. What types of homes and amenities are you looking for?
Single-family homes generally appeal more than condos since they eliminate sharing elevators, lobbies, pools, dog parks, and gyms.
Exceptions abound, especially when designs focus on keeping renters or buyers apart. Developer Valor Capital, which is constructing Serena by the Sea in Dunedin, Fla., near Clearwater, went back to the drawing board when the pandemic hit to add touchless features, individual condo air-intake systems, and a concierge service to deliver spa treatments, walk dogs, organize closets, says Regina Sotomayor, chief sales officer. More than half the 80 units have been pre-sold.
When it comes to homes, many buyers and renters seek greater square footage to accommodate more family and fit their new mindset. “They no longer think of it as a vacation house but a primary home that needs to be comfortable for long-term,” Saatchi says.
That was the case with the home that designer Staci Munic bought when she switched her primary residence from Chicago to Palm Springs, Calif., and sold a California condo that was previously her vacation getaway. “I found I loved being here and having a relaxed lifestyle with morning bicycle rides,” she says. But she was glad she rented first. “It gave me the opportunity to experience an area in different seasons and alleviate buying under pressure,” she says.
Other buyers who don’t know whether their home will be temporary or permanent also desire more space. “About 95% of SummerHill’s buyers are first-time homeowners who like getting a second bedroom, office, fireplace, space for their Peloton bicycle, and balcony—especially after years of renting a tiny apartment,” Neighbor says. He expects many will stay post-pandemic, even if they commute occasionally to a corporate office.
For Tish Horton, a warmer winter climate and chance to live near a daughter drew her to a second home in Newland’s masterplan Nexton community in Summerville, S.C., 30 miles from Charleston. She plans to commute to her other home and daughter in Dayton.
Working from home has led people to stay longer, often with extended family members. Buyers and renters alike are looking for Zoom nooks and smart designs for ease of daily living. Other amenities in high demand are garages, ample storage, fenced yards (for pandemic-era adopted pups), closed rather than open kitchens, greater access to outdoors, and wellness programs.
“Well-living is the new green,” says Manny Gonzalez, AIA, LEED AP, principal at KTGY Architecture + Planning’s Los Angeles office. “People look for air and water filtration, home monitoring, and sustainability.”
Living in a conservation-minded development where all houses are focused on those principles is another option gaining traction, Aziz says. As an example, he cites architect Drew Lang’s Hudson Woods with 26 modern, sustainable homes on 131 forested Catskills acres.
Also, the more turnkey a listing, the greater the appeal since it’s become harder to find contractors and materials.
5. What amenities are you looking for in nearby towns?
Depending on the location, more stores are remaining open during what were once non-peak times because of the increased traffic. Waldrop attributes the popularity of her area’s Central Beach downtown to the bustling activity of an open farmer’s market, ice cream shops, restaurants, and parks.
In the Hamptons, art galleries have opened after testing the waters with pop-ups, says Saatchi. The Cape, once empty in winter, is experiencing growing pains as residents seek services, says Martin. “The Cape is going to have to pivot and figure out how to do this,” she says.
In Harbor Country Michigan, increased population has led to a need for more trash pickups, says Milovich. In Palm Springs, the dining scene has ratcheted up, Munic adds.
What’s Ahead in Hot Markets
For now, the pace remains dizzying. “In the first two months of this year, Grimes’ rental company hit 50 percent of its total 2020 revenue,” she says. Milovich says his area’s listings with pools already are booked.
Yet, some of the any-price-goes mentality is beginning to wane, Saatchi says. “I see more buyers get sober, stick to a budget, and decide not to bid up prices so high,” she says. Fall may bring a return to what’s more normal, Milovich says. “It still should be strong but not quite what it was a year ago,” he says.