Thoughts on housing "crash" of 2nd/vacation homes?

2 Replies

I am looking to buy some property outside Los Angeles (where I currently live) to rent out as an airbnb. I have a theory that the secondary homes will be the first to get offloaded. If there is a "crash", do you think this assumption is correct? The market in the areas I'm looking is still very hot, and the cabins are selling double for what they went for 5-10 years ago. I'm waiting until end of 2021/early 2022 in hopes they will see a drop. Do you think this is a good strategy?

@Brianna Gardner - tough saying not knowing. Timing the market or waiting for a crash is tough. I have a place in Mammoth Lakes where values are on a tear. Very low inventory, high demand, folks want out of the big city, and work from home frees people up. I don't wait to buy I just buy at numbers that work for me. I've bought several properties in the last year. 

@Brianna Gardner I am no analyst, and this is purely speculation, but...

The effects of covid are much worse for low to middle income people who have had lost their jobs and don't have savings or outside income to pay bills. I think it will be the primary residences of these people that will be most effected. They have forbearances on their mortgages or are behind on their rent but can't be evicted yet, and once evictions and foreclosures start again it could get ugly.

However, by definition people that own vacation or second homes have expendable income, and often from other sources than their primary job. A lot of these people that are more well off have been able to work from home through covid, unlike service industry workers, etc. I have talked to so many people in Southern California that are waiting for the same thing to happen, but at least in Mammoth I don't foresee a steep drop in prices anytime soon. All of the clients that I manage vacation rentals for here have been able to continue to make mortgage payments even when tourism was shut down and they had no airbnb income for months. And like @Lee Ripma said , there are so many people trying to escape the city right now, I dont imagine demand dropping that much soon.