High-net-worth buyers tend to rent first to test out locations while they wait for their dream home to hit the market
BY ANNE MACHALINSKI / November 24, 2017
There are several U.S. vacation destinations that high-net-worth individuals flock to every summer, including the Hamptons on the tip of Long Island, New York; Nantucket, Massachusetts; Aspen, Colorado; and Lake Tahoe, which straddles Nevada and California.
Increasingly, many of these locations are also popular during the winter, whether that’s for skiing somewhere like Jackson Hole, Wyoming, going to the beach in Hawaii, or relaxing during the off season in Cape Cod, Massachusetts.
While many families rent a single-family home for vacation, paying $10,000 or more per week during the peak season, every year some will decide to put down roots and purchase a property. Depending on the location, these vacation homes—often the third or fourth property in a buyer’s portfolio—start at around $5 million and go up to well beyond $40 million.
What often spurs that purchase decision is a desire to create a family retreat that can be used for generations—not some calculated plan related to wealth appreciation or buy-to-let investment potential, experts say.
“Vacation home purchases aren’t about rental income or obtaining an appreciating asset,” said Brittanie Rockhill, an Aspen-based broker with Douglas Elliman, “but are about the non-monetary factors, such as not having to pack or manage logistics when you travel.”
These buyers want to say, “let’s go have some family time this weekend,” and be off to their home at a moment’s notice, she continued. “Time is always their most important resource.”
In addition to purchasing a vacation property as a family retreat that they can visit any time they want, picking a destination where they might live for a significant part of every year after retirement is another factor that pushes potential buyers to purchase that vacation home rather than go on renting.
These two motivations aren’t just specific to high-net-worth individuals. According to the 2017 National Association of Realtors’ Investment and Vacation Home Buyers Survey, which tracks all U.S. home purchases, including the 721,000 vacation homes purchased in 2016, 42% of vacation home buyers bought a property as a family retreat while 18% purchased for their future retirement. Read the Full Article.