The article cites the availability of air conditioning as a major factor in vacation home trends. Prior to AC, escaping heat was the main purpose to have a vacation home. That’s why so many vacation homes are near old major cities like Philadelphia, New York, Boston, Chicago, etc. In the summer, families with money escaped to the mountains or the beach, where it was much more pleasant during the hot months.
I would guess that another huge factor has been the decline in the real cost of air travel. It’s now cheap enough that people with money can reasonably expect to fly somewhere for every vacation they want to take. You don’t need a condo near the local ski resort if you can fly to a different one every winter.
In fact, I feel buying property in one vacation spot is starting to look more like an anchor than an escape hatch. Keeping capital in securities instead is more liquid and less expensive (stocks don’t have roofs or plumbing). Let someone else own the hotel or AirBnB or VRBO. I’ll fly in and rent it just for the vacation. This mindset may partially explain why vacation home ownership has not “kept up” with the growth in real wealth.
This is a win win win for all involved, owner, renter, and Airbnb. I converted stocks into a vacation home on puget sound and rent it out when we aren’t using it. Demand is high enough that we don’t need to rent it out months in advance so we still feel like it’s mostly ours and we’re not just another guest fitting into Airbnb’s schedule.
To your point I liked the liquidity of equities but it has been nice to do something with it beyond just watching a number in a spreadsheet. If we want a change in scenery it’s a wash to rent our own place out and stay in another.
Liquidity is a major factor for me thats kept me out of real estate in the past, have the money burning AI buyers helped make home trading more liquid?
I came to that conclusion years ago. I guess that for a family or group of friends, a ski condo could maybe make sense--or for literal snowbirds that migrated with the season.
But the conclusion I came to years ago was that who wanted to be tied down to a particular location or urban location for vacation. Yeah, it's not cheap but more-so than owning and having to deal with a second home.
> The article cites the availability of air conditioning as a major factor in vacation home trends. Prior to AC, escaping heat was the main purpose to have a vacation home.
One of the (main?) reasons why the Bretton Woods Conference [1] (that determined the post-WW2 financial/currency regime) was held in Bretton Woods, New Hampshire [2] was because no one wanted to be in Washington, DC, in July when it was schedule to take place because of the oppressive heat and humidity that tends to occur in DC during the summer.
If you treat days of the year as fungible, the math on owning a ski condo looks bad. But if you want the ability to look at the weather forecast, see that it is about to dump, then drive to the mountain before the storm arrives and set up shop before they close the highways, you are not going to pay a lot more than the standard nightly rate.
> You don’t need a condo near the local ski resort if you can fly to a different one every winter.
lodging at a ski resort is still very expensive though. I think i makes sense to buy one if you ski ~100 days/year and airbnb out rest of the time. Lots of ski resorts now have summer activities like mtb and hiking too.
and ski resorts usually are sentimental purchases.
100 days/year is a huge amount. I don't really downhill any longer but I'd have very little interest in getting a place for a lot less than that for the purposes of stashing my gear.
I’ve been to many old mansion estates, and in hotter climates the maid staff would have the upstairs rooms with potentially the best rooms. (Although the rooms were designed to be afterthoughts for maids.) I found that interesting, whats desirable has completely flipped based on our ability to make it comfortable.
let me clarify: penthouses and top floor rooms are the best rooms now because they can be kept cool, and have views.
in the past the top floor rooms were the worst rooms because couldnt be kept cool, while also having views.
in older estates, its interesting to see that the lowest ranked personnel were living in areas that are now coveted for the highest ranked personnel. due to their current ability to be kept cool.
Even among recently constructed large houses, some of them have in-law or staff units at the top. Due to the huge size of the roof system, they can be awkward places where the ceiling gets low near the outside, few windows and poor natural light, etc.
This is interesting, but one axis it's missing is that in some places the "vacation homes" aren't actually habitable year round. Quite a few cabins in Maine are neither insulated nor heated for the winters, are only accessible via roads that aren't maintained during the winter, etc. I'm not familiar with the area but I would guess that Minnesota's Lake Country and other similar places have the same thing going on.
Happens here in MN too. I own a vacation home that used to be a fishing resort in the 40s-70s and now shares water / septic with 5 other cabins; we turn the water off mid-Oct to end of April because the lines are only buried about 2 feet deep.
Having a three-season place is pretty common here.
The most interesting part of this is the map of census tracts that shows how most vacation homes are tightly grouped.
For example, Florida has a lot of vacation homes (8% of the state's housing vs 3% nationwide), but the vast majority of Florida census tracts have a tiny proportion and vacation homes are the majority in a few small areas. In some areas, the proportion of vacation homes seems to follow population density (gulf coast of Florida), and in other areas it follows the _inverse_ of population density (northern Maine.)
What I think would be really interesting is a map of distance to primary home by census tract. Obviously Florida vacation homeowners are mostly from far away and in New England they live closer, but what about all the other areas?
All of the data about vacation homes grossly underestimates the vacancy rate because of the US primary residence deduction. There's a higher rate of vacancies even in non-vacation areas, and in vacation areas extremely high rates 75% or more for certain neighborhoods
Most likely investors are setting up phony identities and marking the homes as occupied to claim deductions
I knew numerous people that have a vacation home in Florida due to their parents retiring there and then passing away. They decide to hold onto the house/condo as an investment rather than using it in any way. Given how many people were retiring to Florida, I wonder how many vacation homes there are due to this rather than being the preferred purchasing location for younger generations.
I suspect the "vacation" homes on Manhattan are really mostly empty luxury units for foreign rich people to park money in the US. "Billionaires Row" near Central Park is half empty for just this reason.
It’s not really “parking” wealth since property taxes are still collected every year on these properties, which fund other city programs, unlike other asset classes like stocks and crypto.
Presumably if the residents don’t even live there, then they are massive net contributors to the tax base
A lot of vacation towns have pretty good school systems thanks to the fact that many of the people who pay the real estate tax don't send their kids to the schools.
It's not clear to me from this article or from the census page whether this definition of vacation homes includes residential units rented out via AirBnB or the like. But the numbers seem to suggest it doesn't, since some data ( https://insideairbnb.com/los-angeles/ ) says that, for instance, Los Angeles has 45k AirBnB listings while the article claims only 14k vacation homes in LA.
I'd guess the ones in Alaska are rentals
for seasonal workers. I understand there are tourist areas that are largely unpopulated in the winter and populated mostly by seasonal workers in the summer (some of whom work in Hawaii the other half of the year).
There are a number of retired people that bounce between Michigan and Florida (or Arizona) depending on the season. You might say they have 2 vacation homes :-)
Too bad there no adjustment for price. Many of those “vacation homes” in the north are a few acres of wilderness and improvements worth a few thousand max.
Zoning, as the author points to, is not the issue around those parts.
This explains very little. State income tax is based on your state of residence, not where you have a vacation home, in which by definition you do not live most of the year. Further, it makes no sense to refer to "the state with no income tax", as there are many of those.
Granted, there are some working-age people who buy a vacation home with the thought of moving into it permanently a decade or two into the future, but those plans entail a lot of uncertainty (health, closeness to family) and of course once they move, it is no longer a vacation home.
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not have income taxes. Less than 20% isn't 'many' to me but I realize YMMV.
But when you have less money, every dollar counts. The income tax in places like Cali or NYS can be huge because it eats into the disposable income. It could easy cut your disposable income in half or maybe eat it all.
Not quite. Retired people have deferred income in IRAs and 401(k)s that can be claimed at their leisure after 59.5 years old. So if you deferred taxes from a high tax State and then get the income in a no-tax State, you saved on taxes.
Depends on what you mean by retired. In the traditional sense you’re correct, retired people don’t have income. In the legal sense retirement just means the person is of age to collect benefits. But there is also the question of type of income.
If a retired person owns property and sells it, that is income subject to capital gains tax.
If a person is retired but still owns the business or is even still a board member, they’re still working in a sense and gaining shares.
There are plenty of “retired” people who are “working” and have income.
Or at least not much income. But they still probably have dividends/interest. May well have annuities of various kinds. Probably not much W-2 income but probably some material cash-flow, especially if they have a vacation home.
Depends how much money you retired with. When the ratio of your net worth to the cost of a house is high enough, property taxes are trivial. Let's say you have $50 million and you earn 7% a year on that. That's $3.5 million a year. Well worth it to live in FL to save the $350K you would lose every year in NY / CA.
If you are a bone fide resident of Puerto Rico, you generally aren't subject to federal income tax. The commonwealth has an income tax though... depending on your income, it might be more or less than the federal tax; the top rate is lower, but the brackets are smaller so you get to the top rate sooner.
That's the TL;DR for the least interesting part of the article since most would expect Florida to have the most.
It's well known as a major state to retire to, and many of the things that make a place attractive as a retirement destination also make it attractive as a vacation home location. And it is a high population state so when comparing by absolute numbers it would be the most obvious candidate for most vacation homes.
The interesting part is where it looks at percentage of homes in the state that are vacation homes. Florida is high by that measure too at 8.2%, but behind Maine and Vermont which are each over 15%, and New Hampshire at over 10%.
It is even a little behind Alaska (8.9%) and Delaware (8.6%). I bet not many people would have guessed that Alaska has a higher percentage of vacation homes that Florida.
Hawaii is also interesting. It has twice the population of Alaska, but only slightly more vacation homes (31.6k vs 29.2k).
Yes but it's Hawaii. Common sense reasoning only lets you conclude that rich people have vacation homes in Hawaii, not some specific percentage relative to the rest of the states. I bet it if the math was done based on vacation land area, Hawaii would come up near the top, given Lanai. Probably places like Montana too.
> I bet it if the math was done based on vacation land area, Hawaii would come up near the top, given Lanai
I’d be shocked if the parcels that Larry Ellison owns on Lanai are classified in a way that would show up as a vacation home. Typically rich large landowners in Hawaii are “gentleman farmers” who (ab)use agricultural tax loopholes.
Or an abundance of lakes like Minnesota, Wisconsin, and Michigan, which are also Great Lakes states.
Finland also has a high amount of vacation homes on lakeshore property, and I would guess that pretty much any area with glacial lakes within hours of population centers will have lots of vacation homes.
Dear map makers who show us by-state break-downs: normalize by the population. The first map tells me this: New York, Florida, and Texas have large populations.
If you are have an objective squint, a lot of vacation homes have wheels. Per Google AI just prior to pasting:
As of 2024, there are an estimated 11.2 million RV-owning households in the U.S., according to Emergency Assistance Plus.
That's more than double the 4.8 million mentioned in the article...and theoretically some households could own more than two. But modulo RV's are also used for work travel particularly when it comes to construction.
Like anything relating to housing and real-estate, it's complicated.
The article cites the availability of air conditioning as a major factor in vacation home trends. Prior to AC, escaping heat was the main purpose to have a vacation home. That’s why so many vacation homes are near old major cities like Philadelphia, New York, Boston, Chicago, etc. In the summer, families with money escaped to the mountains or the beach, where it was much more pleasant during the hot months.
I would guess that another huge factor has been the decline in the real cost of air travel. It’s now cheap enough that people with money can reasonably expect to fly somewhere for every vacation they want to take. You don’t need a condo near the local ski resort if you can fly to a different one every winter.
In fact, I feel buying property in one vacation spot is starting to look more like an anchor than an escape hatch. Keeping capital in securities instead is more liquid and less expensive (stocks don’t have roofs or plumbing). Let someone else own the hotel or AirBnB or VRBO. I’ll fly in and rent it just for the vacation. This mindset may partially explain why vacation home ownership has not “kept up” with the growth in real wealth.
Good plan in theory until you get to the first AirBnb you've pre-booked for 1-4 weeks and it's destroyed with mold.
But, then again, some people don't notice marginal increase in neurotoxins.
This is a win win win for all involved, owner, renter, and Airbnb. I converted stocks into a vacation home on puget sound and rent it out when we aren’t using it. Demand is high enough that we don’t need to rent it out months in advance so we still feel like it’s mostly ours and we’re not just another guest fitting into Airbnb’s schedule.
To your point I liked the liquidity of equities but it has been nice to do something with it beyond just watching a number in a spreadsheet. If we want a change in scenery it’s a wash to rent our own place out and stay in another.
i am guessing an agency manages your airbnb? how does that work out financially?
Just google "property manager profit split".
Liquidity is a major factor for me thats kept me out of real estate in the past, have the money burning AI buyers helped make home trading more liquid?
I came to that conclusion years ago. I guess that for a family or group of friends, a ski condo could maybe make sense--or for literal snowbirds that migrated with the season.
But the conclusion I came to years ago was that who wanted to be tied down to a particular location or urban location for vacation. Yeah, it's not cheap but more-so than owning and having to deal with a second home.
> The article cites the availability of air conditioning as a major factor in vacation home trends. Prior to AC, escaping heat was the main purpose to have a vacation home.
One of the (main?) reasons why the Bretton Woods Conference [1] (that determined the post-WW2 financial/currency regime) was held in Bretton Woods, New Hampshire [2] was because no one wanted to be in Washington, DC, in July when it was schedule to take place because of the oppressive heat and humidity that tends to occur in DC during the summer.
[1] https://en.wikipedia.org/wiki/Bretton_Woods_Conference
[2] https://en.wikipedia.org/wiki/Bretton_Woods,_New_Hampshire
If you treat days of the year as fungible, the math on owning a ski condo looks bad. But if you want the ability to look at the weather forecast, see that it is about to dump, then drive to the mountain before the storm arrives and set up shop before they close the highways, you are not going to pay a lot more than the standard nightly rate.
> You don’t need a condo near the local ski resort if you can fly to a different one every winter.
lodging at a ski resort is still very expensive though. I think i makes sense to buy one if you ski ~100 days/year and airbnb out rest of the time. Lots of ski resorts now have summer activities like mtb and hiking too.
and ski resorts usually are sentimental purchases.
100 days/year is a huge amount. I don't really downhill any longer but I'd have very little interest in getting a place for a lot less than that for the purposes of stashing my gear.
I’ve been to many old mansion estates, and in hotter climates the maid staff would have the upstairs rooms with potentially the best rooms. (Although the rooms were designed to be afterthoughts for maids.) I found that interesting, whats desirable has completely flipped based on our ability to make it comfortable.
I mean, attics and top floors with no AC often get swelteringly lot because heat rises
plus heat transfer from the sun through the roof
Yes, you explained the comment
AC makes it comfortable if you have it
i think the confusing thing about parsing your comment is calling the maid's quarters the best rooms
okay.
let me clarify: penthouses and top floor rooms are the best rooms now because they can be kept cool, and have views.
in the past the top floor rooms were the worst rooms because couldnt be kept cool, while also having views.
in older estates, its interesting to see that the lowest ranked personnel were living in areas that are now coveted for the highest ranked personnel. due to their current ability to be kept cool.
Even among recently constructed large houses, some of them have in-law or staff units at the top. Due to the huge size of the roof system, they can be awkward places where the ceiling gets low near the outside, few windows and poor natural light, etc.
This is interesting, but one axis it's missing is that in some places the "vacation homes" aren't actually habitable year round. Quite a few cabins in Maine are neither insulated nor heated for the winters, are only accessible via roads that aren't maintained during the winter, etc. I'm not familiar with the area but I would guess that Minnesota's Lake Country and other similar places have the same thing going on.
This also occurs in the Rockies:
https://en.wikipedia.org/wiki/Crystal,_Gunnison_County,_Colo...
Happens here in MN too. I own a vacation home that used to be a fishing resort in the 40s-70s and now shares water / septic with 5 other cabins; we turn the water off mid-Oct to end of April because the lines are only buried about 2 feet deep.
Having a three-season place is pretty common here.
The most interesting part of this is the map of census tracts that shows how most vacation homes are tightly grouped.
For example, Florida has a lot of vacation homes (8% of the state's housing vs 3% nationwide), but the vast majority of Florida census tracts have a tiny proportion and vacation homes are the majority in a few small areas. In some areas, the proportion of vacation homes seems to follow population density (gulf coast of Florida), and in other areas it follows the _inverse_ of population density (northern Maine.)
What I think would be really interesting is a map of distance to primary home by census tract. Obviously Florida vacation homeowners are mostly from far away and in New England they live closer, but what about all the other areas?
All of the data about vacation homes grossly underestimates the vacancy rate because of the US primary residence deduction. There's a higher rate of vacancies even in non-vacation areas, and in vacation areas extremely high rates 75% or more for certain neighborhoods
Most likely investors are setting up phony identities and marking the homes as occupied to claim deductions
I knew numerous people that have a vacation home in Florida due to their parents retiring there and then passing away. They decide to hold onto the house/condo as an investment rather than using it in any way. Given how many people were retiring to Florida, I wonder how many vacation homes there are due to this rather than being the preferred purchasing location for younger generations.
I suspect the "vacation" homes on Manhattan are really mostly empty luxury units for foreign rich people to park money in the US. "Billionaires Row" near Central Park is half empty for just this reason.
Shower thought, maybe bitcoin is actually good for the environment, if it replaces even more wasteful ways of trying to park wealth.
It’s not really “parking” wealth since property taxes are still collected every year on these properties, which fund other city programs, unlike other asset classes like stocks and crypto.
Presumably if the residents don’t even live there, then they are massive net contributors to the tax base
A lot of vacation towns have pretty good school systems thanks to the fact that many of the people who pay the real estate tax don't send their kids to the schools.
It's not clear to me from this article or from the census page whether this definition of vacation homes includes residential units rented out via AirBnB or the like. But the numbers seem to suggest it doesn't, since some data ( https://insideairbnb.com/los-angeles/ ) says that, for instance, Los Angeles has 45k AirBnB listings while the article claims only 14k vacation homes in LA.
I'd guess the ones in Alaska are rentals for seasonal workers. I understand there are tourist areas that are largely unpopulated in the winter and populated mostly by seasonal workers in the summer (some of whom work in Hawaii the other half of the year).
There are a number of retired people that bounce between Michigan and Florida (or Arizona) depending on the season. You might say they have 2 vacation homes :-)
I’m glad that Maine lives up to its Vacationland slogan
Too bad there no adjustment for price. Many of those “vacation homes” in the north are a few acres of wilderness and improvements worth a few thousand max.
Zoning, as the author points to, is not the issue around those parts.
The largest generation in US history is retiring and buying property in the state with no income tax.
This explains very little. State income tax is based on your state of residence, not where you have a vacation home, in which by definition you do not live most of the year. Further, it makes no sense to refer to "the state with no income tax", as there are many of those.
Granted, there are some working-age people who buy a vacation home with the thought of moving into it permanently a decade or two into the future, but those plans entail a lot of uncertainty (health, closeness to family) and of course once they move, it is no longer a vacation home.
> as there are many of those.
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not have income taxes. Less than 20% isn't 'many' to me but I realize YMMV.
9 is "many" if you're using "THE state with no income tax" as a singular noun.
Or you spend 6 months + 1 day in your 0 tax state (possibly with some creative accounting) and the rest in high income tax state.
When they retire, they sell their house in the place with the job and move full time to the no tax state.
So, no income tax right when you have less income?
But when you have less money, every dollar counts. The income tax in places like Cali or NYS can be huge because it eats into the disposable income. It could easy cut your disposable income in half or maybe eat it all.
This is not even logical, retired people don't have incomes. Anyways, they get them with insane property taxes.
Not quite. Retired people have deferred income in IRAs and 401(k)s that can be claimed at their leisure after 59.5 years old. So if you deferred taxes from a high tax State and then get the income in a no-tax State, you saved on taxes.
True but generally this is lower than their W-2 was.
The point is that you finally have control of where are when you realize the income.
Depends on what you mean by retired. In the traditional sense you’re correct, retired people don’t have income. In the legal sense retirement just means the person is of age to collect benefits. But there is also the question of type of income.
If a retired person owns property and sells it, that is income subject to capital gains tax.
If a person is retired but still owns the business or is even still a board member, they’re still working in a sense and gaining shares.
There are plenty of “retired” people who are “working” and have income.
Or at least not much income. But they still probably have dividends/interest. May well have annuities of various kinds. Probably not much W-2 income but probably some material cash-flow, especially if they have a vacation home.
Income from Social Security benefits and 401(k)s are taxable.
Florida's property tax rate on average, according to Google is 0.79%. Average home price is $411,000, for property taxes of $3,200 per year.
That doesn't seem insane compared to say California with 0.71%?
New York state has a number of exemptions for property tax for seniors (65+), which seems like a better mechanism than California's prop 13.
Depends how much money you retired with. When the ratio of your net worth to the cost of a house is high enough, property taxes are trivial. Let's say you have $50 million and you earn 7% a year on that. That's $3.5 million a year. Well worth it to live in FL to save the $350K you would lose every year in NY / CA.
Anything that involves living in FL isn't really worth it :P
Yes, yes - terrible place. Horrible beaches, rivers, etc. Too many snakes, gators and mosquitoes. And we're all full.
And a corresponding level of services.
> The largest generation in US history is retiring and buying property in the state with no income tax.
Millenials are retiring already?
If I got a vacation home it would probably be in Puerto Rico. Not part of the analysis.
Then figure out a way to get out of income tax.
If you are a bone fide resident of Puerto Rico, you generally aren't subject to federal income tax. The commonwealth has an income tax though... depending on your income, it might be more or less than the federal tax; the top rate is lower, but the brackets are smaller so you get to the top rate sooner.
TL;DR In Florida
That's the TL;DR for the least interesting part of the article since most would expect Florida to have the most.
It's well known as a major state to retire to, and many of the things that make a place attractive as a retirement destination also make it attractive as a vacation home location. And it is a high population state so when comparing by absolute numbers it would be the most obvious candidate for most vacation homes.
The interesting part is where it looks at percentage of homes in the state that are vacation homes. Florida is high by that measure too at 8.2%, but behind Maine and Vermont which are each over 15%, and New Hampshire at over 10%.
It is even a little behind Alaska (8.9%) and Delaware (8.6%). I bet not many people would have guessed that Alaska has a higher percentage of vacation homes that Florida.
Hawaii is also interesting. It has twice the population of Alaska, but only slightly more vacation homes (31.6k vs 29.2k).
FL, ME, and VT also allow for weather arbitrage. People winter in FL and summer in places like ME and VT.
> Hawaii is also interesting. It has twice the population of Alaska, but only slightly more vacation homes (31.6k vs 29.2k).
Common sense reasoning: people cannot afford to have their vacation home in Hawaii.
High prices, long and expensive flights.
Yes but it's Hawaii. Common sense reasoning only lets you conclude that rich people have vacation homes in Hawaii, not some specific percentage relative to the rest of the states. I bet it if the math was done based on vacation land area, Hawaii would come up near the top, given Lanai. Probably places like Montana too.
> I bet it if the math was done based on vacation land area, Hawaii would come up near the top, given Lanai
I’d be shocked if the parcels that Larry Ellison owns on Lanai are classified in a way that would show up as a vacation home. Typically rich large landowners in Hawaii are “gentleman farmers” who (ab)use agricultural tax loopholes.
https://jacobin.com/2023/06/agriculture-property-tax-break-u...
And less dramatically, states that have a coast (ocean, gulf, or large lake)
Or an abundance of lakes like Minnesota, Wisconsin, and Michigan, which are also Great Lakes states.
Finland also has a high amount of vacation homes on lakeshore property, and I would guess that pretty much any area with glacial lakes within hours of population centers will have lots of vacation homes.
Dear map makers who show us by-state break-downs: normalize by the population. The first map tells me this: New York, Florida, and Texas have large populations.
Is that appropriate in this case? I would expect lots of vacation homes be owned by people out of state.
Second map is "Percent of housing units that are vacation homes".
My point would be: the second map belongs in the article because it is informative. The first one does not.
https://xkcd.com/1138/
If you are have an objective squint, a lot of vacation homes have wheels. Per Google AI just prior to pasting:
As of 2024, there are an estimated 11.2 million RV-owning households in the U.S., according to Emergency Assistance Plus.
That's more than double the 4.8 million mentioned in the article...and theoretically some households could own more than two. But modulo RV's are also used for work travel particularly when it comes to construction.
Like anything relating to housing and real-estate, it's complicated.