Whether it is for retirement or buying a second home, Americans head for the sun — and for decades that has meant heading for the South. Still, not all markets can provide the best returns when the intention is to rent out the vacation home.
To find the best place to buy a vacation home, 24/7 Wall St. reviewed Real estate rental company Vacasa’s report 2023: Top 25 Best Places to Buy 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 25 best places to buy a vacation home on our list, Southern states include some of the best markets with the highest returns. Twenty-one markets of the list are located in eight states.
Eight of those 21 locations are in Florida, 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.)
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. It is two Virginia markets that hold the first and third spots for the highest returns.
Not all the vacation spots are in the South. 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.)
Vacation home buyers tend to favor smaller locales — four of the destinations or our list had populations of 1,000 people or fewer.
Here are the best places to buy a vacation home.
25. Corpus Christi, Texas
Source: RoschetzkyIstockPhoto / iStock via Getty Images
- 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
Source: Pete Marovich / Getty Images
- 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
Source: Kruck20 / iStock via Getty Images
- 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
Source: Public Domain / Wikimedia Commons
- 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
Source: csfotoimages / iStock Editorial via Getty Images
- 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
Source: DenisTangneyJr / Getty Images
- 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
Source: RobHainer / iStock via Getty Images
- 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
Source: Ruth Peterkin / iStock via Getty Images
- 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
Source: Sean Pavone / iStock via Getty Images
- 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
Source: EJ-J / iStock via Getty Images
- 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
Source: f11photo / iStock via Getty Images
- 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
Source: Meinzahn / iStock via Getty Images
- 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
Source: jfbenning / iStock Editorial via Getty Images
- 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
Source: Donna Derrick / iStock via Getty Images
- 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
Source: Veni / E+ via Getty Images
- 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
Source: Robert Kirk / iStock via Getty Images
- 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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