Millennials, who are born between 1981 and 1996, are now a significant portion of the home-buying population in India. A lot of millennials today are slowly changing their perspective towards real estate and are slowly embracing buying vacation homes trend! A significant number of them are choosing to buy vacation homes, which provide a space for rest and recreation, as well as a potential investment. This generation is increasingly spending money on travel, vacations, and accommodation.
Here are some of the reasons why millennials are buying vacation homes:
1. Investment opportunity
Vacation homes can be rented out when not in use, providing a source of passive income for millennials, especially in popular travel destinations. It’s one of the main reasons millennials are purchasing vacation homes. The potential rental income will often cover the mortgage payment, cleaning fees, and other expenses that are associated with owning a home. With websites like Airbnb renting has never been easier.
2. Escape from city life and desire for new experiences
The pandemic has accelerated the trend of city dwellers seeking out more space and greenery. Vacation homes provide a much-needed escape from the hustle and bustle of city life. Millennials value unique and memorable experiences, and owning a vacation home provides a new adventure every time they visit. Remote work is a massive factor in this trend as the pandemic forced many workers to work from home. And working from home is increasingly getting popular among younger generations. With flexibility over work location, many Millennials seek a new location for vacations and remote work. This is why vacation homes are taking a priority.
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3. Affordability
The low-interest rate environment and a shift towards remote work have made owning a vacation home more affordable for many millennials. Home prices are another factor as home prices have surged in many cities and metropolitan areas. Buyers consider new regions and locations to purchase a place, like in a rural location. Other living expenses are rising too, especially in popular cities. Homebuyers in high-rent markets use their vacation home as a loophole to avoid high home prices while still investing in real estate.
4. Appreciating Price
Real estate values, particularly in popular tourist destinations, tend to rise over time. So, even if you don’t rent out the property, it could still help you accumulate significant wealth over time. You could convert your vacation home into a steady source of income by renting it out. If you cannot afford a down payment where you wish to live, renting and buying a vacation home makes the most sense, and a second home in another area you’re considering would appreciate over time.
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Conclusion
Overall, vacation homes offer a unique combination of affordability, escape from city life, investment opportunity, desire for new experiences, and family memories. This is why so many millennials are choosing to invest in them.
(By Ankit Aggarwal, MD, Devika Group)