Is it Time to Sell Your Vacation Home? July 2, 2020

Is it Time to Sell Your Vacation Home?

The travel industry is one of the major sectors that’s been hit extremely hard by the COVID-19 Pandemic. Today, it’s hard to know how long it will take for summer travelers to be back in action and for the industry to fully recover. Homeowners who rent their secondary properties on their own or through programs like Airbnb have been impacted. According to the Hotel Association of Canada in 2017, there were approximately 70,000 Airbnb hosts with over 100,500 listings in Canada generating one-half billion in revenues. That number has certainly grown in the last 3 years. There is little doubt that most vacation property owners have been impacted by COVID and some of these homeowners are considering selling their vacation homes - understandably so.

A recent CNN article stated:

“With global travel screeching to a halt during the pandemic, a number of Airbnb hosts are planning to sell their properties...These desperate moves come as hosts face the possibility of losing thousands of dollars a month in canceled bookings while bills, maintenance costs and mortgage payments pile up.”

If you’re one of the property owners in this position, you too may be feeling the pain of decreased travel, especially as we prepare for the typical busy summer vacation season. A recent survey by The Vanier Institute of the Family in Canada found that 59 percent of adults living with children had to change travel plans due to COVID-19 and 72 percent of parents reported it was “unlikely” they would take a vacation in 2020. According to the findings, the main reason people usually go on vacation include spending time with their families. This year they have had an abundance of time together meaning the usual draw is not there. In addition, financial insecurity, needing to be close to home to manage return to work and return to school are key considerations for families staying home this summer.

While we do not have easy access to similar statistics in Canada yet, the numbers from the United States indicate that that the vast majority of people, over 70 percent, are putting their travel plans on hold for at least 6 months or are still unsure of their future travel. This can continue to add to the significant income loss that many property renters are feeling this year.

If you’re considering selling your rental property, know that there are two key factors indicating that selling your vacation home now may be your best move as a homeowner.

Inventory Shortage

The inventory of overall homes for sale is well below the demand from potential buyers, so many eyes may be searching for a home like yours. According to the Canadian Real Estate Association, while the market picked up significantly month over month in May (an increase of 57 percent), activity is still down by almost 40 percent year over year. The number of newly listed properties was up 69 percent from April 2020 to May 2020 however the new supply is still 38 percent below the May 2019 numbers.

Inventory across the country continues to be a challenge. For a balanced market, where there are enough homes available for interested buyers to purchase, that number would need to bump up. This means we don’t have enough inventory for the number of buyers looking to buy homes, so selling in this scenario is ideal. Buyers are looking now, and some vacation homes make great primary residences or second homes for those eager to escape from more populated urban areas.

Home Prices

The lack of inventory is also keeping homes from depreciating in value. Today, prices are holding strong and experts forecast home price appreciation to continue throughout this year. Selling your home while prices are holding steady is a sound business move. You’ll likely have the equity you’ve earned working for you as well. If your home has been vacant for the past few months, the forced savings you have built in your equity may help balance out possible rental income loss due to the slowdown in the travel industry.

Bottom Line

We don’t know exactly when heightened summer travel will return or what it will look like when it does. If you’re considering selling your vacation home, let’s connect today to determine your options in the current market. Give one of our experts a call 416-522-1112 or email ian.walterhoues@century21.ca.

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