More travelers are choosing to stay in vacation rentals instead of hotels or resorts when going on family trips because they offer more space and privacy, better amenities and a chance to stay in some truly unique properties. As a result, the second-home market has changed significantly over the past decade. Vrbo and global real estate adviser Savills surveyed 7,800 homeowners in 10 major markets (UK, US, Spain, Canada, France, Italy, Netherlands, Portugal, New Zealand and Brazil) to glean insights on trends in the second-home market for a new report.
Intent to Rent
We asked second-home owners around the world why they purchased a second home, and just under half reported doing so with the intent to rent it out on a short-term basis from the get-go. For the second straight year, this has overtaken the number of homeowners who buy second homes for their own use as a vacation home.
In the US, 42% of homeowners are buying a second home for use as a vacation rental, up from 26% 10 years ago. Additionally, a third of homeowners reported renting out their second home primarily to cover the cost of the mortgage and taxes, and nearly 40% are using rental earnings as a secondary source of income. This shows that American homeowners are taking advantage of the opportunity to turn their second homes into income-generating assets by renting them out to travelers.
At Home or Abroad
There’s a divide between nationalities who prefer to buy second homes in their home country and ones who prefer to own in international locales. American and French second-home buyers most often stay close to home, whereas the British and Canadians are most often investing overseas.
This year, 94% of American homeowners own a property in the US, up from 84% in 2018. And this trend will likely continue — only 4% of American homeowners who are planning to buy another property will do so outside of the US. Like Americans, French second-home buyers also tend to purchase properties in their own country, with 89% owning in France.
However, just 31% of second homes purchased by Brits are in the UK, with locations like France and Spain reported as the most popular for second homes. And like the British, Canadians also tend to buy properties away from home, but their buying activity is dominated by one country: the US.
Regardless of where or why homeowners are buying a second home, they all agree on one thing: internet access is essential. Any internet, no matter the speed, is the most important feature to homeowners planning to buy a second home.
After internet access, 47% of US homeowners consider central air conditioning to be most important, whereas 55% of Greek, 25% of Portuguese and 19% of Italian homeowners believe having a balcony or terrace is essential, and 30% of British homeowners want access to a swimming pool.
Buying, Not Inheriting
Nearly 50 years ago, 40% of second homes were inherited or gifted, but the second-home market is now dominated by cash buyers and those who take out a mortgage. In 2019, less than 5% of US, British and Canadian homeowners reported inheriting or being gifted their second home.
Of survey respondents who are buying rather than inheriting second homes, more than half of Brazilian, French, British and Belgian second-home owners reported personally financing the purchase of a second home with cash. On the flipside, nearly half of all second-home owners in the US, New Zealand and Spain reported taking out a mortgage to purchase their second home.
To read the full report, click here.