Second homes, holiday homes, vacation villas – they are a mark of status, a reward for reaching certain financial milestones, a familiar place to hang your hat (or your swimsuit) and relax when enjoying some respite from the grind of daily life… and for some, they can also be a very smart investment.
Just a few short years ago, when the world was suffering a recession, holiday homes couldn’t have been farther from anyone’s mind and resort areas popular with holiday home purchasers around the world were struggling to attract buyers as everyone suffered through several years with little to no available financing and cash flow issues that tightened everyone’s belt. The reality of having passed through such a challenging time in a popular resort area that appeals to vacationers from around the world is that we can now see with some added perspective of time, that even the areas hardest hit have essentially bounced back to pre-recession pricing and many have bounded far beyond.
Let’s pause for a moment to contemplate the reasons that people make luxury purchases such as holiday villas as we are not discussing a pure investment purchases like commercial centers, gas stations, or the like. We are looking at a home that is being purchased with discretionary funds (with or without a mortgage) for the purpose of enjoying it with friends and family. The difference between purchasing a holiday or vacation property and a luxury car for example, is that that both are purchased because of an emotional connection but unlike the car, the home can be justified with logic and backed up with numbers. This is where additional research becomes important as the purchase can really span the best of both worlds if done wisely.
If we look at Orlando, Florida as a prime example, Orlando has been the number 1 family destination for several years attracting over 68 million visitors in 2016. Ensuring this number continues to increase year on year and that the region remains the top vacation destination in the world is a job that the entire State takes very seriously and therefore, we can assume that barring any acts of God, this number should reasonably continue to grow each year. After all, it’s big business!
Then if you look at the overall population growth in the region, you can see that that this is no longer the Orlando of just Mickey ears. Yes it is that, but it is rapidly growing into an area of diversified industry with high tech, simulation and life sciences being at the front of this booming region. It now boasts major league sports, arts, theatre, and is seeing a population growth that continues to fuel housing needs.
Interestingly, the cost of living still hasn’t caught up with many larger cities through-out the USA and while Forbes recently stated that Orlando was the number 1 city to purchase real estate in the USA, the prices are still incredibly affordable with a luxury condo in the resort area ranging from $150,000 to $200,000 in a smaller 3-4 star type resort community to $300,000 -$400,000 (in a full service, five star resort such as The Grove Resort & Spa). Townhouses or attached row houses are in the range of $250,000 to $400,000 and detached villas with 4 to 13 bedrooms, gorgeous private pools and all the modcons any discerning buyer could ever ask for including game rooms and gated communities range from $350,000 to $600,000. All of which can be rented to vacationers or holiday makers when not in use.
So while a holiday or vacation home is undoubtedly a luxury purchase made for the use and enjoyment of the owner, family, and friends. When purchasing in an area that has all of the signs of sustainable growth, both as the top vacation destination in the world and now also as a booming local and international business metropolis, it is certainly a good bet that it is money well placed.