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.
Well, arguably it’s a win except for local populations in some areas where enough housing is converted to vacation housing that they complain and don’t like it for various reasons. There is a balance to be struck.
I’m sympathetic to that complaint a bit but it’s also a bit like NIMBY.
Generally I think the cheapness of travel has been an unsung net negative for humanity as a whole.
The local municipalities should pull their heads out of their butts and allow supply to meet demand then.
There's no reason Martha's Vineyard can't have a bajillion condos on it like it's Maimi except that the people who live and vote there would rather it be expensive than available.
I don’t think that’s the answer either. Plus if you did that you’d defeat the purpose of Martha’s Vineyard anyway. If you want to live in a condo land like Miami then just move to Miami.
yeah seriously there isn’t enough housing in major cities so the little new construction that isn’t rentals has a good chance of turning into an “investment property” via someone buying the mortgage and immediately turning it into a rental unit or airbnb unit. I really think that cities should either outlaw these type of units or tax them heavily and divert all new funds into new housing construction, or just incentivize so much new housing it turns into a losing investment
source: i live in seattle and my partner owns property where 1/4 of their neighbors are landlords in a new construction complex
NYC has outlawed them more than 30 days (unless it's just a room and you're in the unit). NY state has legally created a registry and now smaller towns are requiring permits.
But Seattle and NYC Airbnbs aren't second homes, it's investments people were trying to play with. A vacation home is more a seasonal spot near a beach or a lake or mountain. That sort of stuff doesn't steal some middle class family's chances of renting something cheaper by pulling a unit off the rental market.
Pied-à-terre is a thing in places like NYC, London, etc. Certainly you are right that there are differences and different cities have different features which attract different folks with different ideas.
But I think vacation home can include not just a season spot near a beach or lake or mountain - people buy vacation homes in Mallorca, or Venice, or Provence, or wherever too.
I am not really opposed to them or anything like that, I just wanted to point out there are some harmful effects for some places. The travel industry and the ease of travel is probably more of a concern, because instead of having a family buy a vacation property on a beach somewhere, you've got an entire industry turning that vacation spot into a zoo and for the number of people that do live in that vacation area it hollows it out a bit of any sort of meaning. The whole thing becomes a simulation of a vacation spot.
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 am referring to the speed of buying and selling even when there are buyers. In crypto and the stock market its minutes to one day to both sell and get cash in your bank account that can be used for anything else. For real estate its weeks to hundreds of days even if there are many buyers. The AI buyers accelerated that.
I’m asking about people’s experience in a world where AI buyers have already existed for 3-5 years. You’ll have to take a time machine to debate that.
For price discovery and matching buyers and sellers? Maybe. The financial considerations still control decisions. Without much technology needing to be involved, you still have insane bidding wars in hot markets and decisions have to be made quickly (hence cash/no financing contingency being so popular). And if there's too much inventory or an area where people are exiting from, the opposite.
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.
> 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.
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.
A lot of people come to the conclusion that the best way to achieve it is to buy a condo. So you don’t have to do a research project to pick which of the few unbooked places on Airbnb are acceptable before you can go skiing.
High property taxes and insurance costs are another factor that's changed the equation. I'm not sure how profitable it is to operate a second home as a business anymore, unless it's very special and very well marketed. If anything it feels like a personal luxury.
Couldn’t you say basically the same thing about vacation homes? Plenty of people have shown up to their lake house and found broken windows, leaky roof, broken pipes, etc… that have lead to mold.
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?
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.
As with any stats-laden post, I wanted to understand what exactly a “vacation house” was. A footnote in the article references a “census of housing” and I found information on the US Census website. There are 6 main categories for vacant houses (vacation/seasonal is one of them), and at least some of them have subcategories.
It is pretty likely that “vacation house” doesn’t include a lot of housing that most people would think of when they think about vacation houses. If something is listed on AirBnb or VRBO, for example, it is almost certainly not included in these stats.
If the home listed on Airbnb is also occasionally used by the owner, it would count as a vacation home. Otherwise it's just business property, more similar to a hotel than a vacation home. I got the sense that it's more about vacationing use by the owner, not short-term rental use by a non-owner.
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.
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
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 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.
Well, crypto "leaks" too, to things like power companies and GPU manufacturers. That's made up for in growth of the value of the idle asset.
The value, though, relies on the idea that some time in the future the asset can be used as something more than an asset to sit on - e.g, people could live there. Currently though, it's unused for that so I think it's fair to call it idle.
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.
It has been my observation that no-income-tax states make up for it in sales tax and/or property tax. Government is getting its cut one way or another. Of course, retirees will want to skip CA altogether with their income tax and ridiculous sales tax.
As you sort of allude to, YMMV. I moved from California to Nevada and literally all taxation went down.
Income tax from progressive scheme nearing 10% to 0%
Sales tax from ~9% to ~8%
Property taxes are hard to pin to a single value, but with housing prices just being lower in general you wind up paying less for similar footage/amenities
While it doesn't mean the observation is fundamentally inaccurate, it's worth keeping in mind that people looking at states with 0% income tax may be coming from a place where they're just getting reamed because work wants them there. If you're not flying under the SALT cap and work is remote friendly it's worth at least looking around.
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.
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 :-)
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.
I expect there are exceptions like Manhattan/Long Island. Maybe Denver and a ski condo. But, generally, people are looking for something different in a vacation home from their residence, whether climate or activities that aren't especially nearby for a weekend trip.
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.
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.
Well, arguably it’s a win except for local populations in some areas where enough housing is converted to vacation housing that they complain and don’t like it for various reasons. There is a balance to be struck.
I’m sympathetic to that complaint a bit but it’s also a bit like NIMBY.
Generally I think the cheapness of travel has been an unsung net negative for humanity as a whole.
The local municipalities should pull their heads out of their butts and allow supply to meet demand then.
There's no reason Martha's Vineyard can't have a bajillion condos on it like it's Maimi except that the people who live and vote there would rather it be expensive than available.
I don’t think that’s the answer either. Plus if you did that you’d defeat the purpose of Martha’s Vineyard anyway. If you want to live in a condo land like Miami then just move to Miami.
yeah seriously there isn’t enough housing in major cities so the little new construction that isn’t rentals has a good chance of turning into an “investment property” via someone buying the mortgage and immediately turning it into a rental unit or airbnb unit. I really think that cities should either outlaw these type of units or tax them heavily and divert all new funds into new housing construction, or just incentivize so much new housing it turns into a losing investment
source: i live in seattle and my partner owns property where 1/4 of their neighbors are landlords in a new construction complex
NYC has outlawed them more than 30 days (unless it's just a room and you're in the unit). NY state has legally created a registry and now smaller towns are requiring permits.
But Seattle and NYC Airbnbs aren't second homes, it's investments people were trying to play with. A vacation home is more a seasonal spot near a beach or a lake or mountain. That sort of stuff doesn't steal some middle class family's chances of renting something cheaper by pulling a unit off the rental market.
Pied-à-terre is a thing in places like NYC, London, etc. Certainly you are right that there are differences and different cities have different features which attract different folks with different ideas.
But I think vacation home can include not just a season spot near a beach or lake or mountain - people buy vacation homes in Mallorca, or Venice, or Provence, or wherever too.
I am not really opposed to them or anything like that, I just wanted to point out there are some harmful effects for some places. The travel industry and the ease of travel is probably more of a concern, because instead of having a family buy a vacation property on a beach somewhere, you've got an entire industry turning that vacation spot into a zoo and for the number of people that do live in that vacation area it hollows it out a bit of any sort of meaning. The whole thing becomes a simulation of a vacation spot.
> NYC has outlawed them more than 30 days
did it help the problems that are being mentioned here.
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?
Supply and demand makes investments liquid. If there's no demand you're stuck trying to sell. If there's no supply you'll overpay. Why AI?
I am referring to the speed of buying and selling even when there are buyers. In crypto and the stock market its minutes to one day to both sell and get cash in your bank account that can be used for anything else. For real estate its weeks to hundreds of days even if there are many buyers. The AI buyers accelerated that.
I’m asking about people’s experience in a world where AI buyers have already existed for 3-5 years. You’ll have to take a time machine to debate that.
For price discovery and matching buyers and sellers? Maybe. The financial considerations still control decisions. Without much technology needing to be involved, you still have insane bidding wars in hot markets and decisions have to be made quickly (hence cash/no financing contingency being so popular). And if there's too much inventory or an area where people are exiting from, the opposite.
i am guessing an agency manages your airbnb? how does that work out financially?
Just google "property manager profit split".
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
> 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.
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.
I would expect that people with that mindset would be willing to pay quite a bit more than the standard nightly rate to have that experience.
Somehow I left an extra “not” in my comment.
A lot of people come to the conclusion that the best way to achieve it is to buy a condo. So you don’t have to do a research project to pick which of the few unbooked places on Airbnb are acceptable before you can go skiing.
High property taxes and insurance costs are another factor that's changed the equation. I'm not sure how profitable it is to operate a second home as a business anymore, unless it's very special and very well marketed. If anything it feels like a personal luxury.
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.
Couldn’t you say basically the same thing about vacation homes? Plenty of people have shown up to their lake house and found broken windows, leaky roof, broken pipes, etc… that have lead to mold.
Yes.
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
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.
plus heat transfer from the sun through the roof
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?
This[0] might provide some context to your question, links to the New York Times Connectedness map:
[0] https://www.fastcompany.com/90239274/infographic-did-faceboo...
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.
As with any stats-laden post, I wanted to understand what exactly a “vacation house” was. A footnote in the article references a “census of housing” and I found information on the US Census website. There are 6 main categories for vacant houses (vacation/seasonal is one of them), and at least some of them have subcategories.
It is pretty likely that “vacation house” doesn’t include a lot of housing that most people would think of when they think about vacation houses. If something is listed on AirBnb or VRBO, for example, it is almost certainly not included in these stats.
If the home listed on Airbnb is also occasionally used by the owner, it would count as a vacation home. Otherwise it's just business property, more similar to a hotel than a vacation home. I got the sense that it's more about vacationing use by the owner, not short-term rental use by a non-owner.
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.
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’m glad that Maine lives up to its Vacationland slogan
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 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.
Well, crypto "leaks" too, to things like power companies and GPU manufacturers. That's made up for in growth of the value of the idle asset.
The value, though, relies on the idea that some time in the future the asset can be used as something more than an asset to sit on - e.g, people could live there. Currently though, it's unused for that so I think it's fair to call it idle.
Bitcoin goes up and down in wild, multi month and year swings. Manhattan real estate (condos at least) go only one direction.
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.
> 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
This just protects your 6 months and 1 day. The other 182 days will likely be subject to tax by the high-tax state.
When they retire, they sell their house in the place with the job and move full time to the no tax state.
What does that have to do with vacation homes?
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.
It has been my observation that no-income-tax states make up for it in sales tax and/or property tax. Government is getting its cut one way or another. Of course, retirees will want to skip CA altogether with their income tax and ridiculous sales tax.
As you sort of allude to, YMMV. I moved from California to Nevada and literally all taxation went down.
Income tax from progressive scheme nearing 10% to 0%
Sales tax from ~9% to ~8%
Property taxes are hard to pin to a single value, but with housing prices just being lower in general you wind up paying less for similar footage/amenities
While it doesn't mean the observation is fundamentally inaccurate, it's worth keeping in mind that people looking at states with 0% income tax may be coming from a place where they're just getting reamed because work wants them there. If you're not flying under the SALT cap and work is remote friendly it's worth at least looking around.
One good measure is tax take as a fraction of state GDP [1].
[1] https://www.sciotoanalysis.com/news/2024/6/25/how-do-state-t...
> The largest generation in US history is retiring and buying property in the state with no income tax.
Millenials are retiring already?
And a corresponding level of services.
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.
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%?
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.
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.
Income from Social Security benefits and 401(k)s are taxable.
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.
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 :-)
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.
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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.
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.
Second map is "Percent of housing units that are vacation homes".
Really highlights the IL->WI gradient.
My point would be: the second map belongs in the article because it is informative. The first one does not.
Is that appropriate in this case? I would expect lots of vacation homes be owned by people out of state.
I expect there are exceptions like Manhattan/Long Island. Maybe Denver and a ski condo. But, generally, people are looking for something different in a vacation home from their residence, whether climate or activities that aren't especially nearby for a weekend trip.
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.