When it comes to buying a vacation home, where to purchase can be a tough decision. According to the National Association of Realtors, the majority of Americans opt for a location that is within driving distance of where they live. But if you love warm weather and live in a cold climate, you may want to choose a location that is known for sunshine and heat.
Americans typically head for the sun, whether it is for retirement or buying a second home, and for decades that has meant heading for the South. Yet, not every area is as desirable as others and when it comes to investing, not all markets can provide the best returns if you intend to rent out the vacation home.
24/7 Wall St. reviewed Real estate rental company Vacasa’s report 2023: Top 25 Best Places to Buy a Vacation Home to find the ultimate destination for buying a vacation home. Vacasa ranked vacation markets by their cap (or capitalization) rate, which is the annual rate of return on investment strictly from projected net operating income (gross revenue minus expenses not including mortgage payments) relative to the purchase price.
Median home sale prices also came from Vacasa, while average temperatures came mostly from WeatherWX.com, and population figures came from the Census Bureau 2021 Annual Community Survey five-year estimates unless otherwise noted.
Of the ultimate destinations for buying a vacation home listed here, Southern states include some of the best markets with the highest returns. Twenty-one markets on the list are located in eight states. North and South Carolina each have three destinations on the list. Virginia and Tennessee each have two, including Nashville, the most populous place on the list. Two Virginia markets hold the first and third spots for the highest returns.
But no other state has the number of locations to choose from than Florida, which has eight of the 21 locales, including three among the top 10 markets with the best returns. The annual rate of return from renting out a vacation home in Okaloosa Island, for example, is about 9%, and it is 6.5% in Navarre. Indeed the U.S. Census Bureau reported in January that Florida became the fastest-growing state for the first time since 1957. (Also see how Florida’s population will change in the next 20 years.)
Although it may seem as if the South is where everyone is setting up second-home roots, not all the vacation spots are in this region. The Pacific Northwest, represented by Washington and Oregon, is desired by holiday seekers, as is Killington, Vermont, which has the lowest median home sale price of any place on our list at $267,500. That’s barely one-fourth the median home sales price of homes at Isle of Palms in South Carolina, at $1.2 million, the priciest on the list. (Also see American cities with the most million dollar homes.)
Here is the ultimate destination for buying a vacation home.
25. Corpus Christi, Texas
- Annual rate of return on investment: 3.61%
- Median home sale price: $273,200 — #24 out of 25 markets
- Average January temperatures: Hi 66°F Lo 52°F
- Average July temperatures: Hi 92°F Lo 78°F
- Population, 2021: 318,168
24. Isle of Palms, South Carolina
- Annual rate of return on investment: 3.65%
- Median home sale price: $1,200,000 — #1 out of 25 markets
- Average January temperatures: Hi 58°F Lo 46°F
- Average July temperatures: Hi 86°F Lo 78°F
- Population, 2021: 4,318
23. Anna Maria, Florida
- Annual rate of return on investment: 3.73%
- Median home sale price: $858,500 — #4 out of 25 markets
- Average January temperatures: Hi 68°F Lo 58°F
- Average July temperatures: Hi 87°F Lo 80°F
- Population, 2021: 944
22. North Myrtle Beach, South Carolina
- Annual rate of return on investment: 3.75%
- Median home sale price: $365,000 — #20 out of 25 markets
- Average January temperatures: Hi 55°F Lo 42°F
- Average July temperatures: Hi 87°F Lo 76°F
- Population, 2021: 18,502
21. Edisto Beach, South Carolina
- Annual rate of return on investment: 3.76%
- Median home sale price: $725,000 — #6 out of 25 markets
- Average January temperatures: Hi 57°F Lo 40°F
- Average July temperatures: Hi 90°F Lo 76°F
- Population, 2021: 759
20. Middle Keys, Florida
- Annual rate of return on investment: 3.77%
- Median home sale price: $700,000 — #7 out of 25 markets
- Average January temperatures: Hi 73°F Lo 69°F
- Average July temperatures: Hi 85°F Lo 83°F
- Population, 2021: 11,685 (2020)
19. Westport, Washington
- Annual rate of return on investment: 3.88%
- Median home sale price: $370,000 — #19 out of 25 markets
- Average January temperatures: Hi 46°F Lo 38°F
- Average July temperatures: Hi 68°F Lo 53°F
- Population, 2021: 2,199
18. Gatlinburg, Tennessee
- Annual rate of return on investment: 3.93%
- Median home sale price: $648,800 — #8 out of 25 markets
- Average January temperatures: Hi 44°F Lo 28°F
- Average July temperatures: Hi 82°F Lo 64°F
- Population, 2021: 3,684
17. Killington, Vermont
- Annual rate of return on investment: 4.06%
- Median home sale price: $267,500 — #25 out of 25 markets
- Average January temperatures: Hi 25°F Lo 10°F
- Average July temperatures: Hi 77°F Lo 58°F
- Population, 2021: 433
16. Panama City Beach, Florida
- Annual rate of return on investment: 4.11%
- Median home sale price: $425,000 — #15 out of 25 markets
- Average January temperatures: Hi 61°F Lo 48°F
- Average July temperatures: Hi 88°F Lo 78°F
- Population, 2021: 17,882
15. Destin, Florida
- Annual rate of return on investment: 4.16%
- Median home sale price: $596,000 — #11 out of 25 markets
- Average January temperatures: Hi 60°F Lo 48°F
- Average July temperatures: Hi 88°F Lo 79°F
- Population, 2021: 13,751
13. Bradenton, Florida
- Annual rate of return on investment: 4.51%
- Median home sale price: $450,000 — #13 out of 25 markets
- Average January temperatures: Hi 69°F Lo 57°F
- Average July temperatures: Hi 87°F Lo 77°F
- Population, 2021: 54,918
14. Hatteras Island, North Carolina
- Annual rate of return on investment: 4.51%
- Median home sale price: $740,000 — #5 out of 25 markets
- Average January temperatures: Hi 56°F Lo 47°F
- Average July temperatures: Hi 81°F Lo 79°F
- Population, 2021: 552
12. Waldport, Oregon
- Annual rate of return on investment: 4.91%
- Median home sale price: $405,000 — #18 out of 25 markets
- Average January temperatures: Hi 49°F Lo 42°F
- Average July temperatures: Hi 66°F Lo 53°F
- Population, 2021: 1,875
11. Nashville, Tennessee
- Annual rate of return on investment: 5.11%
- Median home sale price: $432,100 — #14 out of 25 markets
- Average January temperatures: Hi 46°F Lo 31°F
- Average July temperatures: Hi 89°F Lo 71°F
- Population, 2021: 682,646 (Nashville-Davidson, Tennessee)
10. Rockaway Beach, Oregon
- Annual rate of return on investment: 5.23%
- Median home sale price: $340,000 — #23 out of 25 markets
- Average January temperatures: Hi 48°F Lo 40°F
- Average July temperatures: Hi 68°F Lo 53°F
- Population, 2021: 1,456
9. Nags Head, North Carolina
- Annual rate of return on investment: 5.45%
- Median home sale price: $615,500 — #10 out of 25 markets
- Average January temperatures: Hi 50°F Lo 41°F
- Average July temperatures: Hi 82°F Lo 77°F
- Population, 2021: 3,096
8. Corolla, North Carolina
- Annual rate of return on investment: 5.47%
- Median home sale price: $927,500 — #3 out of 25 markets
- Average January temperatures: Hi 50°F Lo 39°F
- Average July temperatures: Hi 84°F Lo 76°F
- Population, 2021: 1,219 (Source: Point2Home)
7. Palm Coast, Florida
- Annual rate of return on investment: 5.69%
- Median home sale price: $360,000 — #21 out of 25 markets
- Average January temperatures: Hi 66°F Lo 53°F
- Average July temperatures: Hi 88°F Lo 77°F
- Population, 2021: 88,313
6. Gulf Shores, Alabama
- Annual rate of return on investment: 6.09%
- Median home sale price: $475,000 — #12 out of 25 markets
- Average January temperatures: Hi 60°F Lo 50°F
- Average July temperatures: Hi 86°F Lo 80°F
- Population, 2021: 14,712
5. Navarre, Florida
- Annual rate of return on investment: 6.42%
- Median home sale price: $420,000 — #16 out of 25 markets
- Average January temperatures: Hi 61°F Lo 47°F
- Average July temperatures: Hi 88°F Lo 78°F
- Population, 2021: 38,994
4. Rehoboth Beach, Delaware
- Annual rate of return on investment: 6.46%
- Median home sale price: $618,000 — #9 out of 25 markets
- Average January temperatures: Hi 42°F Lo 33°F
- Average July temperatures: Hi 81°F Lo 73°F
- Population, 2021: 1,392
3. Sandbridge, Virginia
- Annual rate of return on investment: 6.47%
- Median home sale price: $928,900 — #2 out of 25 markets
- Average January temperatures: Hi 48°F Lo 36°F
- Average July temperatures: Hi 84°F Lo 73°F
- Population, 2021: 60,158 (Source: Point2Home)
2. Okaloosa Island, Florida
- Annual rate of return on investment: 9.08%
- Median home sale price: $360,000 — #21 out of 25 markets
- Average January temperatures: Hi 60°F Lo 43°F
- Average July temperatures: Hi 90°F Lo 75°F
- Population, 2021: 22,938 (Source: Point2Home)
1. Lake Anna, Virginia
- Annual rate of return on investment: 10.32%
- Median home sale price: $405,500 — #17 out of 25 markets
- Average January temperatures: Hi 44°F Lo 29°F
- Average July temperatures: Hi 90°F Lo 70°F
- Population, 2021: 20,690 (Source: Point2Home)
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