If you are looking to buy a vacation rental but are wondering if today’s cooling real estate market is the right time, there’s great news: The timing is still good!
Even with today’s higher interest rates and the rising prices of food, home goods, oil, and gas due to labor shortages and ongoing world events, you still can make a good income from renting while watching those property values rise. In fact, there will even be added benefits in the mix.
Let’s look at how you can benefit as a vacation rental owner in today’s market and how to approach buying now.
Why Buying a Vacation Home Still Works
A vacation rental is a smart way to pay off your investment while enjoying higher property values over time. That will require vacationers, but the good news is that they are coming back in a big way. Today’s topsy-turvy world is also bringing new short-term and long-term benefits.
After years of travel restrictions since the emergence of COVID-19, people are venturing back into traveling at full speed. According to the U.S. Travel Forecast by Tourism Economics, domestic leisure travel spending has already surpassed pre-pandemic levels. International leisure travel is expected to pass pre-pandemic levels in 2025. Both domestic and international leisure travel will continue to rise through 2026 (the last year of their forecast).
Interestingly, business travel is reducing due to more people working outside the office, and this helps you as a vacation rental owner. You can increase your rental chances when people can work wherever they are. This trend may hold for years to come.
Even with travel experiencing significant hurdles recently, you can still benefit. Pricing is increasing for flights, and the farther the flight, the higher the cost. This points to shorter domestic travel and more local vacations. Additionally, price increases in oil and gas due to the conflict in Ukraine, among other reasons, will continue to raise prices and in turn, increase demand for travel closer to home. If you plan to own a home in a high-demand area, like here in Sunriver, Oregon, you stand to benefit significantly.
When we look even further into the future, one of the surest long-term bets we can make is that we will live in a continually warming world. If your rental offers benefits like nearby refreshing rivers, lakes, and pools, shady nature trails, and skiing in the winter, you will stay in demand.
How Today’s Cooling Market Benefits You
Even though the world is warming, you may have heard about the recent cooling effect in the real estate market. Why is that? Could this still be the wrong time to buy?
The word “cooling” is misleading because the cooling relates to a previous boiling-hot market. Over the last few years, double-digit percentage price increases have rivaled 2006 and 2007. Now, higher interest rates are working to correct an inflated market. Demand is still extremely high, but the number of home sales nationally vs. a year ago is 14.2% lower. Still, it is predicted that homes will still hover around 5.7% in profit by late 2022.
With an outlook of profits remaining warm, you still stand to benefit financially from a blend of owning and renting. For buyers of new homes, increases in home-building products and shortages in labor are expected, which will keep home prices higher than otherwise.
But the cooling provides you with a few unique benefits vs. years past. Fewer buyers are in the market, making it easier for you to choose a home that you like, and you won’t be overpaying as much as you would have in previous years. You may even be able to negotiate a bit, which is a big change.
You may also have more current homes to select from or more ability to build one. Even a builder of turn-key homes may be able to offer a lower-priced model that previously didn’t fit your budget.
Buying a new home has the added benefit of higher demand as a rental. However, if you buy an older existing home, you still share benefits like a shorter line of competing buyers, better pricing, and immediate turnarounds in rental income.
If you are buying with a mortgage, you can expect continuing higher interest rates, but by experiencing less competition and tapering down your list of home requirements, you can keep your overall cost down. If you are a cash buyer, you can enjoy the same benefits while avoiding the hit of interest rates. You also stand at the front of the line for sellers.
How Using a Vacation Rental Company Helps
Renting is not only easier than you may think, but it can also be more profitable. A professional rental company knows how to rent your property to meet demand and bring top-dollar for your investment. This includes more money during the vacation boom. The longer the business has been around, the better.
Of course, you can handle your home ownership any way that you like and make money in ways that are convenient for you. If you plan to use it yourself now and again, you can, but if not, you’ll have a company that handles rentals all year long and knows how to price each season effectively.
Learn How Much You Can Make With a Sunriver Vacation Rental
At Cascara Vacation Rentals, we have helped vacation renters in Sunriver since 1983. We have expertise in generating top-dollar for your investment and can show you how much you might make for any property that you want to buy. We also know how to service owners and guests effectively to ensure that your guests come back year after year. You can enjoy benefits like home maintenance, reservation assistance, and even a linen program for a hotel-like experience.
To learn more about our services and how we can help you with your new purchase, visit us at https://join.cascaravacations.com/.