Homes in This Lakeside Town See a Yearly Return on Investment Higher Than 10%

24/7 Wall St. Insights

Americans in the market for a second home are buying in specific areas
Southern states have some of the best real estate markets with high returns
Also: Discover the next Nvidia

Homes in America are increasingly expensive, and mortgage rates are through the roof. During the first quarter of 2022, the U.S. home ownership rate was 65.9%, meaning a substantial portion of Americans do not own a house. However, plenty of U.S. citizens are proud homeowners, and owning a home continues to be a part of the American dream. And those who can afford it may even own more than one home.

Americans love to vacation, with popular destinations including Aspen, Colorado and Miami Beach, Florida. But are these the best areas to buy? When purchasing a home, whether a primary residence or a weekend getaway, potential buyers tend to prioritize things like price, design features, and location. The most expensive housing markets are in the states of Hawaii and California, while more affordable options can be found in less popular areas.

24/7 Wall St. reviewed real estate rental company Vacasa’s report 2023: Top 25 Best Places to Buy a Vacation Home to find the ultimate destination for buying a vacation home. Vacasa ranked vacation markets by their cap (or capitalization) rate, which is the annual rate of return on investment strictly from projected net operating income (gross revenue minus expenses, not including mortgage payments) relative to the purchase price.

Median home sale prices also came from Vacasa, while average temperatures came mostly from WeatherWX.com and population figures came from the Census Bureau 2021 Annual Community Survey five-year estimates, unless otherwise noted.

Of the destinations listed here, Southern states include some of the best markets with the highest returns. Twenty-one markets on the list are located in eight states. North and South Carolina each have three destinations on the list. Virginia and Tennessee each have two, including Nashville, the most populous place on the list. Two Virginia markets hold the first and third spots for the highest returns.

No state compares to Florida, which is home to eight of the 21 locales, including three among the top 10 markets with the best returns. The annual rate of return from renting a vacation home in Okaloosa Island, for example, is about 9%, and it is 6.5% in Navarre. Indeed the U.S. Census Bureau reported in January that Florida became the fastest-growing state for the first time since 1957.

Although it seems the South is the most popular choice, not all the vacation spots are in this region. The Pacific Northwest, represented by Washington and Oregon, is desired by holiday seekers, as is Killington, Vermont, which has the lowest median home sale price of any place on our list at $267,500. That’s barely one-quarter of the median home sales price at Isle of Palms in South Carolina, which is $1.2 million, the priciest on the list.

Why We Are Mentioning This

Male driver helps a business lady to get out of a car, opening door of a luxury SUV taxi. Business lady with handbag wearing black formal wear. Concept of transportation service

From the infamous Kardashians to rap artists and celebrities, Americans have a fascination with the ultra-wealthy. Media dedicated to the extravagant lifestyle of the rich and famous draws viewers from across the nation. A big part of this wealth obsession centers around high dollar homes. If you’re ready to join the second-home club, or if you’re simply intrigued to know more, check out these fabulous holiday locations.

Here are the ultimate destinations for buying a vacation home: