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Want to buy a vacation home in today’s market? Prepare to pay all cash

4 Minute Read

There are plenty of good reasons to buy a vacation home. For one thing, if you can afford it, you'll have a designated place to escape to whenever you need a break from everyday life. Plus, a home can be a good investment. It can gain value over time, at which point you can sell it at a profit.

A vacation home can also serve as another income stream for you. If you're willing and able to rent out that home on a short-term basis (which sites like VRBO and Airbnb now make very easy to do), you may make enough money to cover certain expenses of homeownership, such as: 

  • Mortgage
  • Property taxes
  • Homeowners insurance 

But buying a vacation home in the near term may prove challenging. For one thing, housing inventory is extremely limited on a national scale. So you may have a hard time finding a home that meets your needs or works for your budget. Home values have also soared over the course of the past year, so you may find that your money now buys you a lot less.

But those aren't the only reasons you might struggle to buy a vacation home. These days, many buyers are coming in with all-cash offers for vacation properties. And if you need the help of a mortgage lender to finance yours, that unfortunately puts you at an immediate disadvantage.

Cash buyers are taking over

In 2020, vacation home sales rose by 16% compared to 2019, according to the National Association of Realtors. And as of April of 2021, vacation property sales were already up 33% compared to the previous year.

Meanwhile, a growing number of buyers are scooping up vacation homes by paying for them in cash. In fact, more than half of vacation properties purchased this year through April were made in cash, compared to 22% of all existing home sales during that same time frame.

Sellers tend to favor cash offers over offers that are contingent on mortgage financing because they're more of a sure thing. It's always possible for a mortgage to fall through, even if a given buyer has already obtained pre-approval. And even when mortgages don't fall through, they can still take weeks to close. Cash transactions can wrap up in less time, and for sellers looking to move quickly, that's a good thing.

Now this isn't to say that if you're looking for a vacation home right now, you won't be successful if you can't pay in cash. But cash buyers do have a serious edge. So it shouldn't come as a shock to lose out on a home to a buyer with cash on hand.

Once housing inventory opens up, it should become easier to buy a home across the board, and that extends to vacation properties. But if you're not a cash buyer, you may, in the near term, need to exercise a lot of patience when searching for that place to escape to.


This article was written by Maurie Backman from The Motley Fool and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to

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