Taking the Leap and Buying a Vacation Property in 2015
Researched and Written by
The Keir Weimer Team
Emilie Westhoff & Samuel Haugh
Buying a vacation home in the past could seem like a stretch for many people, however, 2015 looks like it could be the year that many can make this dream a reality. In a December 2014 Fox Business Report, writer Chris Birk stated, “there are some genuinely encouraging signs that next year  will be better for prospective buyers.” According to Birk, one positive sign is the fact that mortgage brokerage firms are becoming more generous this year when it comes to offering loans. In addition, mortgage rates are still near historic lows, averaging 3.8 percent as opposed to the projected 5 percent within the next 18 months. Lower down payments are also making purchasing a home more feasible. For example, Fannie Mae and Freddie Mac are agreeing to support loans with as little as 3 percent down, as long as buyers have a FICA credit score of at least 620. While this is for primary residences, it shows the general easing of credit requirements allowing borrowers to more easily borrow money to purchase real estate. The fact that inventories remain stable in many of the Adirondack Park communities and prices are not rising as much as expected quite yet, combine to make the current buying market a favorable one for prospective purchasers of vacation or second home properties.
In addition to a favorable macroeconomic environment for purchasing vacation or second homes in 2015, there are also many additional incentives to buying this type of real estate in 2015. Writer Craig Donofrio highlighted some substantial tax breaks for home buyers in a recent article for Realtor.com. Donofrio pointed out that since points on a mortgage are considered a form of interest, they are tax deductible for some first buyers. Additionally, there are many renewable energy tax credits buyers can take advantage of, such as having solar panels, geothermal heat pumps, or wind turbines, and they can write off those energy saving systems. During 2015 there are also some tax credits that buyers can take advantage of if they purchase a home before some credits expire or are not backed by Congress. Those include deducting money paid on private mortgage insurance and credits for energy upgrades. By capitalizing on many tax credits, buying a primary home or vacation home in 2015 may become possible for many homebuyers, and can be a tax advantageous way to invest in a physical asset that is not only a good store of value that will appreciate over time, but one that you are able to derive utility and value from enjoying the lifestyle that comes with vacation home ownership.
Purchasing a vacation home in the present market can be an excellent investment for buyers. Since the prices of rents are increasing steadily, purchasing a vacation home that can be rented is another excellent way of offsetting or even covering completely the carrying costs of second home ownership. Trey Duling, a writer for an online real estate magazine, advises that buyers should write down their goals for the vacation home they are planning to purchase. In addition, Duling suggests that buyers take a mini-vacation to the area where they want to buy, speaking to locals, touring some properties and studying the area. The most important advice is that buyers hire a knowledgeable Realtor with experience in representing buyers looking to purchase second homes, a professional who can provide counsel, market expertise and can negotiate on your behalf. A good Realtor can also aid in finding a property manager or caretaker, something that is essential to managing a property when the owner is not around. According to Duling, “A vacation home can be a great investment, but you do need to do your homework and make sure you are purchasing the right property for you and your family…There are good investment properties out there; it sometimes just takes a little time and patience to find the right one.”
The Adirondack Park region of Upstate New York is one of the country’s most beautiful and desirable areas to own a vacation home. Although closed sales were down 24.4 percent from a year ago in the Adirondack Park market (a 6 million acre park consisting of private and public land), the average sales price for median homes was down 1.1 percent and average sales price was down 37 percent from a year ago. This indicates a bit of a lull in the market, with tight inventory in many areas and segments of the market…but this is changing quickly, as we’ve seen more market momentum in the first part of 2015 with activity heating up, more properties coming to market, and opportunities for patient buyers unfolding. Since consumers and financial experts believe that mortgage rates are at or near their lowest, and there is only one way for them to move and that is up at the Fed’s consensus, buyers would be prudent to seriously consider 2015 as the year to make the move to purchase the second home they’ve been thinking about for so long.
Only experienced Realtors can provide the proper advice to make a sound decision when purchasing a second home or vacation property, and this is why The Keir Weimer Team of Select Sotheby’s International Realty has earned the reputation as the Adirondack Park’s #1 Real Estate Team. If you would like advice on the benefits of second home ownership, would like to preview and see properties currently available in the Adirondack Park, or would just like to speak to a knowledgeable professional and ask any type of question you may have, don’t hesitate to contact The Keir Weimer Team today.
Birk, Chris. “4 Reasons It Will Be Easier to Buy a Home in 2015.” Fox Business. December 24, 2014. http://www.foxbusiness.com.
Donofrio, Craig. “You Could Get 3 Big Tax Breaks – If You Buy a Home in 2015.” http://www.realtor.com.
Duling, Trey. “7 Tips for Buying a Vacation Property as an Investment.” The Bigger Pockets Blog: An Online Real Estate Magazine. January 12, 2015. http://www.biggerpockets.com.
Housing Market Report: Adirondack Park. New York State Association of Realtors. January 2015.