While it would be wrong to say that the coronavirus pandemic is behind us, there's been much progress in that regard -- even with the new Delta variant causing case numbers to increase more recently. In fact, a lot of people are getting out and traveling this summer in spite of the coronavirus situation.
Unsurprisingly, though, many travelers are favoring private vacation homes over hotels. Not only do these properties offer more space and privacy, but for families with unvaccinated children, they can also be a safer prospect.
During 2021's first quarter, Airbnb saw bookings increase a whopping 52% year over year (YOY). And while bookings may decline later in the year, a lot of people are rushing to make the most of summer by booking trips now, while school's out of session and families have more flexibility to get away. Summertime travel also lends itself to more outdoor activities, which is less risky for families with unvaccinated children.
As a real estate investor who owns a vacation home, this puts you in a great position to capitalize on the summer rental boom. But is that a smart move? Or should you attempt to sell your vacation home now, while buyers are biting and home prices are higher than they've been in years?
A tough call
Home prices in April saw a YOY gain of 14.6%, according to the S&P CoreLogic Case-Shiller National Home Price Index. And that means that as a property owner, you have a prime opportunity to command top dollar if you list your home today.
Right now, there's a general shortage of available homes on the market, and that extends to vacation properties. With mortgage rates sitting near record lows, a lot of investors are clamoring to add short-term rental space to their portfolios. So, if you sell today, you're likely to end up with a string of generous offers.
On the other hand, if you keep your vacation rental, you'll have an opportunity to take advantage of the remaining summer rush -- a rush that will likely extend not only into fall but also, to a large degree, into the holiday season. And that alone is reason enough not to sell.
So, what's the right call? Ultimately, it's a personal decision, and one only you can make. But if your vacation home is doing well and has the potential to attract guests during different seasons, then it could pay to keep that property. On the other hand, if you sell it, you might walk away with a nice pile of cash.
But where will you reinvest that cash? If you're hoping to upgrade to a larger vacation property, you may find that you're left with few options due to inflated home prices and low inventory. For that reason alone, it could pay to hold off on listing your current property.
Of course, if you've been looking to free up cash to add real estate investment trusts (REITs) to your portfolio, then selling a vacation home today is a smart move. But if you're going to sell, you'll need to resign yourself to the possibility that you won't manage to find a replacement property for your portfolio anytime soon. That's just the way the current market is rolling.