The only thing I'll add is the inflation we have experienced recently is due to the devaluation of the dollar, and many folks continue to have a hard time wrapping their mind around the fact that a $50.00 bill now spends like a $20.00 bill did 5-years ago. There's no reversing that effect, so homes that seem over-priced, are in my opinion actually accurately priced given the devaluation of the USD. If you believe that to be true, then real estate prices will continue to increase, and therefore, the sooner you buy the better deal you will get.

One thing that has been hindering me was the future location of our kids and grandkids.

I'd be curious if that impacted anyone's decision. I don't need to go closer to them, but if they go North, I don't want to go South, or whatever. I don't want to go farther from them.

Fireman said:

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The only thing I'll add is the inflation we have experienced recently is due to the devaluation of the dollar, and many folks continue to have a hard time wrapping their mind around the fact that a $50.00 bill now spends like a $20.00 bill did 5-years ago. There's no reversing that effect, so homes that seem over-priced, are in my opinion actually accurately priced given the devaluation of the USD. If you believe that to be true, then real estate prices will continue to increase, and therefore, the sooner you buy the better deal you will get.

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It's a fascinating scenario and the ultimate "million dollar question". On one hand, your inflation context is 100% accurate. On the other hand, the post Covid buyers paid a lot of money for those vacation properties relative to prices from one year earlier and with normalized rental income factored in. And as I mentioned, whether or not you rent, that rental income is baked into those sales prices. I have a friend that has a place in Seaside and he is saying his rental income has taken a big drop in the past 18 months. Essentially, the rental revenues that were part of the price justification is currently deflationary. Will that ultimately make sales prices deflationary?

If someone paid cash for their house and is in a financial position to where the rental income is really just extra cash and are truly looking at it from a vacation home perspective, the housing values should be stable. And those higher prices are really the same price as before with the inflation adjustment. But if those buyers were like us and calculated the rental income as part of the buying formula, they won't have the stomach to keep a cash drain like this can be and will sell those places just to get loose.

Before Covid we were wondering if it was worth a $125,000 a year loss to "own" a vacation home. There is a lot of rental fees a guy can pay each year and be under that 125k budget. And I think it will be worse for a lot of people the next few years. I think the market can reasonably have a pretty significant adjustment, especially with those VRBO minded builds.

Agree completely, and well articulated so potential investors/sellers can see all sides of the issue.

GaryClare said:

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I hope this helps.

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Great post ... I always feel like I'm the only one on these threads that didn't have a great beach house rental experience, so your insights made me feel like I'm not alone.

I loved our home and loved spending time there. Everything else about it was a giant pain in my backside -- and wallet.