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 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.
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.
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'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).
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.
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.
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.
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.
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
Income from Social Security benefits and 401(k)s are taxable.
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.
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?
I’m glad that Maine lives up to its Vacationland slogan
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.
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.
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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.
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.
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?
> 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