2016 NAR Investment and

Vacation Home Buyers Survey

NATIONAL ASSOCIATION OF REALTORS

Research Division
April 2016

2016 NAR Investment and Vacation Home Buyers

Survey
Contents
Introduction .................................................................................................................... 3
Market Environment ........................................................................................................................ 3
The Composition of Residential Sales .............................................................................................. 3
Property Characteristics ................................................................................................................... 3
Optimism and the Future ................................................................................................................. 4
Short Term Rentals (Less than 30 days at a time) ............................................................................. 4
Methodology ................................................................................................................................... 5

Exhibit 1: Investment and Vacation Home Sales and Prices ............................................... 6

Exhibit 2: Property Characteristics .................................................................................... 7
Exhibit 3: Method of Purchase and Financing ................................................................... 8
Exhibit 4: Buyer Motivations and Expectations ................................................................. 9
Exhibit 5: Short Term Rentals (Less than 30 days at a time) ............................................. 10

NATIONAL ASSOCIATION OF REALTORS

2016 NAR Investment and Vacation Home Buyers Survey

Introduction
Traditionally, the majority of home buyers make a primary residence their housing purchase. However, some
buyers purchase a vacation home to use for a family retreat or to purchase for a principal residence in the
future, and some investors purchase a home to rent to others or to diversify their investments. By conducting
a nationally representative online sample of more than 2,000 adults who purchased a home in the last year,
the NAR Investment and Vacation Home Buyers Survey breaks down the share of home sales by primary
residences, vacation homes, or investment properties, and presents several characteristics of the non-primary
residence transaction.
Market Environment
Low housing inventory in 2015 continued to impact housing sales and prices across the nation. As inventory
remained constrained, home prices increased. The increase in home prices lowered the share of homeowners
who were underwater in their home, and decreased the share of distressed home sales nationwide. The rise in
home prices continued to impact first-time home buyers and single home buyers who were shut out by rapid
price escalation, while investors and vacation home buyers remained in the market.
The Composition of Residential Sales
In 2015, the share of buyers who purchased a primary residence rose to 65 percent from 60 percent after
dropping from 67 percent in 2013. The share of vacation home buyers declined to 16 percent from 21 percent;
however, this remains higher than historical data collected since 2003. The share of investment buyers
remained unchanged at 19 percent.
While buyers of primary residences typically purchase homes because of the desire to be a home owner or
due to a job relocation, buyers of vacation and investment homes are motivated by other factors. Thirty-seven
percent of vacation home buyers plan to use their property for vacations or as a family retreat, 16 percent
plan to convert their vacation home into their primary residence in the future, and 13 percent purchased
because of low real estate prices and the buyer found a good deal. Forty-two percent of investment property
buyers purchased the home to generate income through renting the property, 16 percent purchased because
of low real estate prices and the buyer found a good deal, and 14 percent for potential price appreciation.
Property Characteristics
The median price of primary residences continued climbingas it has since 2011. In 2015 the price increased
6.5 percent to $210,000 from $197,200. Seventy-five percent of primary residence buyers used a mortgage.
The share of vacation buyers and investors who purchased a distressed property (short sale or foreclosure) in
2015 declined from 2014. In 2015, 36 percent of vacation buyers purchased a distressed property, down from
45 percent of vacation buyers in 2014. Thirty-eight percent of investors purchased a distressed property in
2015, down from 44 percent in 2014. The median vacation and investor home purchase price was higher in
2015 than in 2014. The typical price was $192,000 for vacation buyers, up from $150,000. Investors typically
purchased a median-priced property of $143,500, up from $124,500. Thirty-nine percent of investors and
vacation buyers paid all cash for their property purchase. When financing their purchase, 52 percent of
vacation buyers and 44 percent of investors financed less than 70 percent of their purchase.

NATIONAL ASSOCIATION OF REALTORS

2016 NAR Investment and Vacation Home Buyers Survey

Among vacation buyers, 27 percent purchased in a resort area, 19 percent purchased in a small town, and 16
percent in a rural areahigher than other buyer types. Forty percent of vacation buyers purchased in a beach
area, 19 percent purchased in the mountains, and 19 percent purchased a vacation home on a lake front.
Forty-one percent of investors purchased in a suburb/subdivision and 29 percent in an urban area/central city.
While a detached single-family home is the most common type of home for all buyer types, higher shares of
vacation buyers and investors purchased condos and townhouses in 2015. The median square feet of a
primary residence was typically 2,000 square feet, while the median square feet of an investment property
purchased was 1,600 and a vacation home was 1,500.
The typical vacation property was 200 miles from the buyers primary residence, while the typical investor
property was 22 miles from their primary residence. The typical investment buyer plans to own their
investment home for five years, unchanged from 2014 investor property buyers.
Short Term Rentals (Less than 30 days at a time)
Investors are most likely to attempt and to rent their properties. Among vacation buyers, 24 percent did or
tried to rent their property in 2015 and plan to rent their property in 2016. Among investors, 41 percent did or
tried to rent their property in 2015 and plan to rent their property in 2016.
Investors plan on renting their properties for 365 days, while vacation buyers plan to rent their properties for
30 days. Twenty-seven percent of investors will rent the property anytime, 25 percent in the summer and 14
percent in the spring. Thirty-eight percent of vacation buyers will rent the property in the summer, 17 percent
in the winter, and 14 percent in the fall. Vacation buyers are more likely to use a property manager or social
media to rent their property, while investors are more likely to use a traditional real estate agency.
Vacation buyers and investors both want to rent the property for additional income; however, vacation buyers
more often want additional income to pay down the mortgage faster, while investors more often need
additional income. Eighty-nine percent of vacation buyers reported potential rental income at least
moderately impacted the monthly costs of ownership through additional income to mortgage. Eighty-nine
percent of investors report potential rental income at least moderately impacted the property value when
buying.
Optimism and the Future
Buyers of primary residences, vacation homes, and investment properties were active in the market despite
the hurdles they may face with low inventory and tight financing. More than 80 percent of vacation buyers
and investment buyers reported that now is a good time to purchase real estate. Twenty-nine percent of
investment buyers are very likely to buy another investment property, and 22 percent of investment buyers
are very likely to purchase a vacation property in the next two years. Similarly, 20 percent of vacation buyers
are likely to purchase an investment property and 20 percent are very likely to purchase another vacation
property in the next two years. Among primary residence buyers, 15 percent are very likely to buy an
investment property and 15 percent are very likely to buy a vacation property in the next two years.

NATIONAL ASSOCIATION OF REALTORS

Methodology
In March 2016, a sample of households that had purchased any type of residential real estate during 2015 was
surveyed. The survey sample was drawn from an online panel of U.S. adults monitored and maintained by an
established survey research firm. A representative sample of 2,053 qualified adults responded to the survey.
Respondents were sampled to meet age and income quotas representative of all home buyers drawn from the
2015 NAR Profile of Home Buyers and Sellers. The share of primary residence buyers was 65 percent, the share
of vacation buyers was 16 percent, and the share of investment buyers was 19 percent.

NATIONAL ASSOCIATION OF REALTORS

2016 Investment and Vacation Home Buyers Survey

Exhibit 1: Vacation and Investment Property Sales and Prices

Share of Home Sales by Intended Use

2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
New and Existing Home Sales (000)
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Pct change 2014-2015
Median Sales Price
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Pct change 2014-2015
NATIONAL ASSOCIATION OF REALTORS
Research Division

Primary
Residences

Vacation
Properties

Investment
Properties

67%
64
60
64
67
70
73
73
61
65
67
60
65

12%
11
12
14
12
9
10
10
11
11
13
21
16

22%
25
28
22
21
21
17
17
27
24
20
19
19

4,844
5,106
5,023
4,817
3,925
3,207
3,441
3,294
2,785
3,268
3,698
3,226
3,738
15.9

850
872
1,019
1,067
670
436
471
469
502
553
717
1,129
920
-18.5

1,572
2,003
2,317
1,646
1,221
951
801
749
1,233
1,207
1,104
1,022
1,093
7.0

$199,500
$196,000
$185,000
$176,700
$167,700
$170,000
$189,000
$197,200
$210,000
6.5

$190,000
$204,100
$200,000
$195,000
$150,000
$169,000
$150,000
$121,300
$150,000
$168,700
$150,000
$192,000
28.0

$148,000
$183,500
$150,000
$150,000
$108,000
$105,000
$94,000
$100,000
$115,000
$130,000
$124,500
$143,500
15.3

April 2016

2016 Investment and Vacation Home Buyers Survey

Exhibit 2: Property Characteristics

Location of Property
Suburb/Subdivision
Urban area/Central city
Rural area
Small town
Resort area
Type of Location
Beach
Mountain
Lake Front
Country
Ranch
Other
Region of Home Purchase
Northeast
Midwest
South
West
Type of Property
Detached single-family
Townhouse or row house
Condo/duplex in building with 2 to 4 units
Condo/apartment in building with 5 or more units
Other
Size of Property
500 sq ft or less
501 sq ft to 1,000 sq ft
1,001 sq ft to 1,500 sq ft
1,501 sq ft to 2,000 sq ft
2,001 sq ft to 2,500 sq ft
2,501 sq ft to 3,000 sq ft
3,001 sq ft or larger
Median (square feet)
Distressed Sale
Home in foreclosure
Short sale
Not a distressed sale
Distance from Primary Residence
5 miles or less
6 to 10 miles
11 to 15 miles
16 to 20 miles
21 to 50 miles
51 to 100 miles
101 to 250 miles
251 to 500 miles
501 to 1,000 miles
1,001 miles or more
Median (miles)
NATIONAL ASSOCIATION OF REALTORS
Research Division

Primary
Residences

Vacation
Properties

Investment
Properties

48%
23
14
13
2

21%
17
16
19
27

41%
29
11
14
6

40%
19
19
16
1
5

18%
20
38
25

15%
13
47
25

18%
17
37
28

78%
9
5
8
1

58%
13
11
14
4

62%
12
11
13
2

6%
8
21
24
17
9
15
2000

11%
19
23
20
10
7
11
1500

5%
11
30
22
13
6
12
1600

16%
11
74

19%
17
64

22%
17
62

*
*
*
5
14
15
18
10
16
21
200

21%
13
10
6
19
5
7
4
6
8
22

April 2016

2016 Investment and Vacation Home Buyers Survey

Exhibit 3: Method of Purchase and Financing

Primary
Residences

Vacation
Properties

Investment
Properties

17%
27
18
38
$81,800

8%
17
23
52
$103,700

10%
23
22
45
$95,800

7%
40
50
3

6%
37
55
3

4%
41
52
3

59%
9
12
15
5

52%
18
14
8
8

55%
14
14
6
11

23%
21
9
8

27%
19
4
6

21%
24
4
6

7
7
5

6
8
6

5
10
6

5
5
5

5
4
9

7
2
10

50%
22
8
6
6
5
2
1

51%
16
12
6
5
4
2
4

47%
16
12
10
3
7
3
2

Mortgage Financing
Used a mortgage
Did not use a mortgage
Don't know

75%
24
1

61%
38
1

61%
39
1

Percent of Purchase Price Financed

Less than 70%
70% to 79%
80% to 89%
90% to 94%
95% to 99%
100% Entire purchase price

31%
19
20
11
8
10

52%
22
17
5
2
3

44%
28
18
5
2
4

Difficulty of Mortgage Application and Approval Process

Much more difficult than expected
Somewhat more difficult than expected
Not difficult/just what expected
Less difficult than expected

13%
26
44
18

15%
28
46
11

8%
25
56
11

Household Income (2015)

Less than $45,000
$45,000 to $74,999
$75,000 to $99,999
More than $100,000
Median
Number of Household Income Earners
None
One
Two
Three or more
Purchase Method
Through a real estate agent or broker
Directly from owner whom the buyer knew
Directly from owner whom the buyer didnt know
Directly from builder or builders agent
Other
First Step Taken in the Home Buying Process
Looked online for properties for sale
Contacted a real estate agent
Contacted a bank or mortgage lender
Visited open houses
Looked online for information about the home buying
process
Drove-by homes/neighborhoods
Contacted a home seller directly
Looked up information about different neighborhoods and
areas
Talked with a friend or relative about the home buying
process
Contacted builder/visited builder models
Other
Where Buyer Found the Home They Purchased
Online
Real estate agent
Friend, relative or neighbor
Yard sign/open house sign
Home builder or their agent
Directly from sellers/Knew the sellers
Print newspaper advertisement
Home book or magazine

* Less than 1 percent

NATIONAL ASSOCIATION OF REALTORS

Research Division

April 2016

2016 Investment and Vacation Home Buyers Survey

Exhibit 4: Buyer Motivation and Expectations

Reasons for Purchasing Home

To use for vacations or as a personal/family retreat
For future retirement
Potential for price appreciation
Low real estate prices/good deal
To generate income through renting property
Low mortgage rates
Other
Length of Time Buyer Plans to Own Property
Have already sold this property
Less than 1 year
1 to 2 years
3 to 5 years
6 to 10 years
11 or more years
Dont know
Median (years)
Likelihood of Buying an Investment Property in Next 2 Years
Very likely
Somewhat likely
Somewhat unlikely
Very unlikely
Don't know
Likelihood of Buying a Vacation Property in Next 2 Years
Very likely
Somewhat likely
Somewhat unlikely
Very unlikely
Don't know
Now is Good Time to Purchase Real Estate
Good time to purchase
Not a good time to purchase
Don't know

NATIONAL ASSOCIATION OF REALTORS

Research Division

Primary
Residences

Vacation
Properties

Investment
Properties

37%
16
12
13
7
12
3

7%
8
14
16
42
8
5

2%
5
9
19
19
33
14
8

2%
8
11
16
19
26
18
7

4%
10
10
21
17
18
20
5

15%
23
15
41
6

20%
31
13
30
6

29%
37
12
15
7

15%
23
12
44
7

20%
27
12
33
7

22%
29
13
25
10

77%
9
14

82%
8
10

84%
8
8

April 2016

2016 Investment and Vacation Home Buyers Survey

Exhibit 5: Short Term Rentals (Less than 30 days at a time)

Short Term Rental Experience

Yes, did try to rent it in 2015 but won't do so again in 2016
Yes, did rent it in 2015 but won't do so again in 2016
Yes, did try to rent it in 2015 and plan to do so again in 2016
Yes, did rent it in 2015 and plan to do so again in 2016
No, did not try to rent it in 2015 and will not do so in 2016
No, did not rent it in 2015 and will not do so in 2016
No, did not try to rent it in 2015 but plan to do so in 2016
No, did not rent it in 2015 but plan to do so in 2016
Median Days Planning on Renting 2016
How Property Rental Was/Will Be Managed
Used traditional real estate agency
Used property manager
Used online site
Used social media
Used word-of-mouth
Other
Potential Rental Income Impacted (At least moderately)
Amount willing to pay for property
Property's value
Montly costs of ownership additional to mortgage
Property's listing price
Mortgage payment felt able to pay
Mortgage payment felt comfortable
Why Rent the Property
Want additional income
Need additional income
Desire to share home/area with others
Inspired by examples of neighbors, friends, relatives who offered shortterm rental
Recommendation from friend/family member
Want additional income to pay down mortgage faster
Past positive experience booking/staying in a short-term rental
Past positive experience offering a short-term rental
Past positive experience as a long-term renter
Past positive experience offering a long-term rental
Opportunity to meet people by renting while staying in property
Other
When Rented and Will Rent
Summer
Spring
Fall
Winter
Anytime
While personally vacationing/traveling
Major holidays
Local events
Other

NATIONAL ASSOCIATION OF REALTORS

Research Division

Primary
Residences

Vacation
Properties

Investment
Properties

7%
6
5
4
33
35
3
7
15

6%
8
12
12
23
24
8
8
30

6%
5
14
28
16
12
9
10
365

41%
37
31
30
28
4

31%
41
34
36
35
2

36%
28
27
27
28
6

85%
84
84
82
81
80

85%
88
89
84
81
81

87%
89
85
84
77
77

38%
29
25

45%
24
22

49%
25
13

22
22
21
20
20
20
19
18
3

22
26
29
22
22
20
20
23
3

21
16
22
14
16
16
19
9
7

35%
19
17
13
6
4
3
1
2

38%
11
14
17
13
4
1
1
1

25%
14
11
7
27
5
2
3
7

April 2016