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Started By
Message
Current State of the Vacation Housing Market
Posted on 1/25/25 at 4:59 pm
Posted on 1/25/25 at 4:59 pm
I have been thinking about, wanting to purchase a beach home in the Florida panhandle for a while now. It seems that currently there are a ton of homes for sale and almost everyday I see several price reductions. When I look at price history, it seems an overwhelming amount of the homes were bought in 2020 for about half of what they are trying to sell them for now, even after some pretty drastic reductions. I am talking a home bought for 500-700k in 2020 for 1-1.5 mil now. I would imagine that with current rates being sticky and people having to go back to the office, or had fun moving to the beach and are now over it-whatever the case may be- it seems that prices are trending down and sellers will start to get offers for closer and closer to what they paid for the home back in 2020. If we get any significant pull backs in the stock market and rates continue to stay sticky above 6% these sellers of the beach homes could potentially start to panic and some deals to be had. I am thinking the timeline for this would be end of this year or sometime in 2026.
I have my opinions, obviously stated above, but wanted to get some others views on the current state of the 2nd home/vacation home market and where it could be headed.
I know I will not be making money on the property and that is not my goal. My goal would be to rent it out the majority of the year and only use it 2-3 weeks a year during low season and when my kids get older potentially spend more time there/retire.
I have my opinions, obviously stated above, but wanted to get some others views on the current state of the 2nd home/vacation home market and where it could be headed.
I know I will not be making money on the property and that is not my goal. My goal would be to rent it out the majority of the year and only use it 2-3 weeks a year during low season and when my kids get older potentially spend more time there/retire.
11
Posted on 1/25/25 at 5:04 pm to thatguy777
Market is shifting majorly because everyone who bought to Air BNB the place out recently is getting absolutely killed by the massive rise in HOA fees and insurance. There will be a glut of properties on market that is already driving prices down and many people will be very reluctant to sell at a loss. It takes a long time for this to correct and really drive prices lower
Posted on 1/25/25 at 5:20 pm to thatguy777
quote:
- it seems that prices are trending down and sellers will start to get offers for closer and closer to what they paid for the home back in 2020
Unfortunately prices are not anywhere close. Prices are still 30-60% up over 2020 if not more. I don’t have the numbers exactly, some stuff has doubled. But they are up a lot. There’s no deals around either like there was. I know someone that bought a condo in 2019 for $399k and just sold it 2 months ago for $599k.
The gulf coast is over built for rentals also. The amount of new rentals has grown much more than the demand growth since 2022. So rents on average are not great, especially as an ROI for current prices.
Insurance and taxes are also up.
This post was edited on 1/25/25 at 5:21 pm
Posted on 1/25/25 at 5:54 pm to UltimaParadox
quote:
Air BNB the place out recently is getting absolutely killed by the massive rise in HOA fees and insurance.
Isn't there still a good chunk of profit cushion even with the sharp rise in HOA fees and insurance? I know some of these baws in Louisiana that own Pensacola Beachfront condos were making close to 6 figures pure profit after all their expenses and setting aside a couple of weeks for themselves, so their margins would appear to be able to absorb massive rises in expenses. They may be down to $50k pure profit annually but that's still pretty damn good.
Posted on 1/25/25 at 6:53 pm to Tomatocantender
quote:
I know some of these baws in Louisiana that own Pensacola Beachfront condos were making close to 6 figures pure profit after all their expenses and setting aside a couple of weeks for themselves
I suppose there are some people like this but it is very much the exception.
Posted on 1/25/25 at 7:21 pm to thatguy777
This post was edited on 2/28/25 at 6:54 pm
Posted on 1/25/25 at 7:29 pm to Tomatocantender
quote:
I know some of these baws in Louisiana that own Pensacola Beachfront condos were making close to 6 figures pure profit after all their expenses and setting aside a couple of weeks for themselves, so their margins would appear to be able to absorb massive rises in expenses.
Yeah if they bought 10 years ago I could see it. But anyone who bought since like 2018 probably not so much.
Condo HOA fees are easily nearing 1k month up from a few hundred. Not even counting insurance etc.
I think rentals still do ok, but that's more location dependent. The usual hot spots got very expensive, and people can't afford vacations as much a lot more down time since people rent 3/4 days instead of one week now days
Posted on 1/25/25 at 7:39 pm to UltimaParadox
This is accurate. Glad I sold at this point
Posted on 1/25/25 at 9:00 pm to UltimaParadox
quote:
Condo HOA fees are easily nearing 1k month up from a few hundred. Not even counting insurance etc.
Florida passed some laws making HOAs be much more proactive on structural issues after that Condo building collapsed in Miami which is driving up dues and assessments. Florida also has the same insurance issues La has in coastal areas.
Posted on 1/26/25 at 9:38 am to UltimaParadox
quote:
Condo HOA fees are easily nearing 1k month up from a few hundred. Not even counting insurance etc.
Insurance for the overall structure and underlying real estate is always going to be included in the condo association fee. What isn't included in the HO6 coverage for the interior of your individual unit.
Posted on 1/26/25 at 11:05 am to thatguy777
Better opportunities in AL ...
Posted on 1/26/25 at 11:24 am to thatguy777
A friend of mine is buying a place in Taos to do what you are thinking about doing. He wanted somewhere in or near mountains. He used AirDNA to decide on Taos. I would look at short term rental data available on that website to find what you are seeking. It is a pay site but if I was looking for another property I would sign up.
This post was edited on 1/26/25 at 11:30 am
Posted on 1/26/25 at 12:40 pm to thatguy777
Let’s be honest. The gulf coast was unbelievably underpriced forever. The fact that you can get beautiful gulf front condos for well under $1,000,000 is wild for the rest of the country
Posted on 1/26/25 at 3:59 pm to thatguy777
good to see this discussion i was going to start the same topic. we've found a small place we can afford in our favorite summer destination (BV, CO area), the place would suit our needs and likes very well (it isnt for everybody though), and it should be rentable long term if needed due to the extreme housing shortage there for normal people.
at 225,000 i would pay cash since rates are not in my favor. i would treat it as an investment of that 225,000 (low risk/med-low reward)
it looks like it should rather easily rent for 1500-1600/mo. as i said its small (600SF) so one person or a couple max for long term living. the neighborhood offers a rather unique private access to one of the two primary attractions of chaffee county and should appreciate in value (not the skyrocket, just normal high demand value increase).
my low target goal would be to not lose money and enjoy it. if i can see the path to that i'm going to buy it. not coincidentally today i read a newspaper for the first time in a while...the obits contained more than enough ages at or near my own (58) to remind me a little risk is OK if it results in pleasure/happiness/connection/engagement/excitement
at 225,000 i would pay cash since rates are not in my favor. i would treat it as an investment of that 225,000 (low risk/med-low reward)
it looks like it should rather easily rent for 1500-1600/mo. as i said its small (600SF) so one person or a couple max for long term living. the neighborhood offers a rather unique private access to one of the two primary attractions of chaffee county and should appreciate in value (not the skyrocket, just normal high demand value increase).
my low target goal would be to not lose money and enjoy it. if i can see the path to that i'm going to buy it. not coincidentally today i read a newspaper for the first time in a while...the obits contained more than enough ages at or near my own (58) to remind me a little risk is OK if it results in pleasure/happiness/connection/engagement/excitement
Posted on 1/26/25 at 4:25 pm to cgrand
Yea I’m thinking a 4 bedroom single family house 2k sqft+ walking distance from the beach, or short golf cart ride, without a pool of its own but is in a community with a pool. I think these features would make it easy to short term rent while I am not there. Florida panhandle. Been doing a good amount of research lately and prices are not where I’d like them to be. Yes buying 4 years ago would’ve made a lot more sense but I was not in the same financial spot then as I am now. Hoping we get down to like 20-30% above 2020 prices in the next couple of years instead of the 100% above currently
It’s something I’ve always wanted and don’t want my 40’s then 50’s to pass me by and keep saying I’ll do it in a few years.
It’s something I’ve always wanted and don’t want my 40’s then 50’s to pass me by and keep saying I’ll do it in a few years.
Posted on 1/26/25 at 4:59 pm to thatguy777
If you are thinking about a vacation property as an investment, here are few things to consider: it may take a long time to sell if you need the money; the rentals will need to be managed and maintenance will be required which will either be your new hobby or a cost that could eat in to your profit. AC- 10K, FRIDGE- 1500, WATER HEATER- 1500, ETC.
Posted on 1/26/25 at 5:06 pm to Shaun176
I own some rentals with long term tenants so this would not be foreign to me. I don’t expect to make any money off it, I do expect to be able to cover most of the mortgage payments with the rental income, not maintenance and HOA fees though.
Posted on 1/26/25 at 11:10 pm to thatguy777
Other costs which have drastically increased include (but are not limited to) Property Taxes, Utilities, any repairs or maintenance.
Unless you’ve had a place on or near the beach, you have no idea how aggressive the environment is towards residential property. Paint, windows, trim, any exterior electrical apparatus, hardware, fencing, roofing, all die quicker and you have to replace them with premium replacements.
Exterior HVAC equipment specifically lasts much less time than it would inland.
Anything that is not in a climate controlled area dies/deteriorates more quickly than at a location away from the beach.
Contractors and maintenance folks in resort areas take advantage of those markets being premium. And there are some bad upkeep players that take advantage of absentee landlords.
And then there’s risk: insurance is going to always be more expensive and tenants tearing your shite up and doing stupid things at your property. Nope
Pass on all of that.
Good luck on your quest.
Unless you’ve had a place on or near the beach, you have no idea how aggressive the environment is towards residential property. Paint, windows, trim, any exterior electrical apparatus, hardware, fencing, roofing, all die quicker and you have to replace them with premium replacements.
Exterior HVAC equipment specifically lasts much less time than it would inland.
Anything that is not in a climate controlled area dies/deteriorates more quickly than at a location away from the beach.
Contractors and maintenance folks in resort areas take advantage of those markets being premium. And there are some bad upkeep players that take advantage of absentee landlords.
And then there’s risk: insurance is going to always be more expensive and tenants tearing your shite up and doing stupid things at your property. Nope
Pass on all of that.
Good luck on your quest.
This post was edited on 1/26/25 at 11:13 pm
Posted on 1/27/25 at 9:10 am to thatguy777
In South Florida the market has softened quite a bit. It seems as though increase cost of insurances is the major culprit for the decrease in sale price. The demand on the part of visitors is also trending down.
Posted on 1/27/25 at 9:47 am to thatguy777
Terrible investment especially in Florida. Fees, cost, the state government stepping in to “protect” consumers (they are protecting building owners), weather and insurance.
The prices will come down because the cost of rental is not currently sustainable.
If you are dead set on Florida I’d wait for a couple more hurricanes to plow through. And be prepared to self insure.
The prices will come down because the cost of rental is not currently sustainable.
If you are dead set on Florida I’d wait for a couple more hurricanes to plow through. And be prepared to self insure.
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