Timing is one of the most important factors to consider when purchasing a primary or secondary home. In 2022, buying a second home could be the right call, under the right circumstances. If you are considering purchasing a second home this year, here are some important factors to consider:
Rental vs. Vacation
If your goal is to purchase that dream vacation home, it might be better to wait. Mortgage rates are currently higher than usual and that could make it harder to keep up with your second home’s mortgage. However, with rent prices up nationally, purchasing a home that you hope to use as a rental is a good investment in the current market. Not only are you expanding your real estate portfolio but getting a tenant at the property will help pay the mortgage and offset other costs.
With mortgage rates expected to climb through 2022, getting in early may be the best way to make that second home dream a reality. Since tomorrow’s price will not be yesterday’s price, waiting could put you in a much higher mortgage situation.
According to Market Watch, many current homeowners have accumulated enough tappable equity that we are now seeing record levels of home equity nationally. A home purchased at median sales prices 10 years ago, and sold today at the median price, could net up to $200,000 in pure equity.
Where Should You Buy?
There are many places that come to mind when you think of hot secondary home markets. California, Florida, and Arizona are some of the most typical areas due to their warm weather and all the amenities that come with it. But there are many hot secondary home markets that might surprise you, locally, nationally, and internationally!
Pacific County, Washington is one such local market. Centered on Willapa Bay, with median home prices averaging $385,000, Pacific County offers beaches, nature, and some of the best oysters in the world. If you are looking for more variety in your surroundings, Spokane County offers nature, seclusion, and a dense metro area, plus easy access to gorgeous lakes in both Washington and Idaho.
Nationally, east coast beach areas dominate the secondary home market. Ocean City, NJ, one of the most famous beach towns in the world, saw nearly 75% of their new mortgages in 2020 taken out for secondary homes. If you are looking for something a bit warmer year-round, South Carolina features two of the top ten secondary markets with Hilton Head and Myrtle Beach, both famous for their beaches and golf courses.
Internationally, the luxury market is strong, but it is still possible to score a good investment home or even a bargain. Greece, Portugal, and Spain have all struggled with recent housing bubbles and recessions, making desirable properties more affordable for foreign investors. However, some of the best secondary home investment areas are nearby. The Dominican Republic offers an idyllic Caribbean destination for a fraction of the price of neighboring islands.
Are you ready to begin your secondary home search? Contact me today at (206) 841-8788 to discuss your options or explore current listings on my website.