Western States Generate Big Returns For Vacation Homeowners
Vacation rental giant Vacasa identified Big Sky, Montana, as the most lucrative market in which property owners can own a second house. Seven western communities ultimately made Vacasa’s list.
A new report out this week from vacation rental giant Vacasa shows properties in a handful of rural and small-town destinations, many of which are located in the West, can generate big returns for owners amid surging interest in second homes and the coronavirus pandemic.
The report explores vacation-oriented housing markets, and identifies Big Sky, Montana, as the best place in the U.S. for a winter home. Big Sky is located in the southwest corner of the state near Yellowstone National Park, and has an economy based largely on tourism. The Vacasa report shows that the median home cost in the area is $541,842. More significantly, second homes that are rented out to travelers when the owners aren’t there have an average cap rate of 9.2 percent.
“Big Sky can yield big returns for homeowners with an annual gross rental revenue of nearly $80,000,” the report states.
This is the second time in less than a year that Big Sky has topped Vacasa’s list of best vacation home markets.
Vacasa further identifies the Poconos region of Pennsylvania as the second best place to buy a winter vacation home. The area includes a mountainous region relatively close to New York City, and according to the report has a median home cost of just slightly more than $200,000. The cap rate for rentals is 8.2 percent and annual gross rental revenue is $38,079, according to the report.
The report notes that the Poconos region has “cozy towns” and areas “ripe for outdoor exploration.” And like Big Sky, the Poconos is also a perennial winner on Vacasa’s lists of most lucrative second home markets.
These are the other top markets Vacasa identified in its latest report:
- Conway, New Hampshire
- Killington, Vermont
- Vail, Colorado
- Big Bear, California
- Breckenridge, Colorado
- Steamboat Springs, Colorado
- Granby, Colorado
- Mammoth Lakes, California
It’s significant that four of the top ten destinations are located in Colorado, and that seven are located in western states. Those findings support earlier reports that the pandemic has driven interest in bigger homes, more space and locations outside of big cities.
Vacasa — which manages rentals and rental communities on behalf of property owners — also notes in its report that second home sales rose 44 percent in 2020. That finding, too, supports other reports and sheds light on how the pandemic generally drove demand for places to which families could escape the rigors of more urban settings.
The new report ultimately frames these trends as an opportunity for would-be property owners.
“With the start of a new year,” the report states, “comes new opportunity and for some, that means investing in a second home.”