Vacation Homes Offer Holiday Dream But Carry House-Sized Risks
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What is the main topic discussed in this episode?
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Here's your Money Briefing for Thursday, September 15th. I'm Daniela Cheslow for The Wall Street Journal, filling in for J.R.
Why is fall and early winter the peak season for buying vacation homes?
Whalen. Summer is over, but the summer home-buying season is bubbling. If you're dreaming about extending that vacation feeling by buying a second home, there are pitfalls to watch out for.
If you're worried about your cash flow, you're worried about your job, you're worried about the potential of recession and you're struggling with rising prices and you're already having a difficult time in making your primary mortgage, do not even consider a second home.
Street Journal's Veronica Dagger covers personal finance. On today's show, she'll talk through the summer home market and how to prevent a vacation house from becoming a money pit.
How has the second-home market changed since the pandemic and what are current trends?
That's after the break.
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Is now a good time for me to buy a second home given mortgage rates and personal finances?
That's R-E-L-I-A-Q-U-E-S-T dot com.
The largest share of vacation home purchases close from the fall to early in the new year, which means right now is second home prime time. But financial advisors say it's important to consider unexpected costs and pitfalls of buying that second home. Veronica Dagger covers personal finance for The Wall Street Journal, and she's with me now. Hi, Veronica. Hey, great to join you. Thanks for being here. Why is the fall such a hot season for buying vacation homes?
Can you reliably count on rental income to pay for a vacation property?
Oh, people are coming off their summer vacation. They want to extend those good vibes. And in a place like Lake Tahoe, for example, August and September are traditionally two of the busiest months of the year. Buyers could be dreaming about spending the winter holidays in their new home and sellers could be looking to avoid having to maintain that property during the winter months.
What's the market like for second homes this year?
Oh, so this year, it's not nearly as hot as it was during the pandemic. Sales of second homes are way down from last year's boom, dipping below pre-pandemic levels for the first time in about two years. And that's according to Redfin. Those higher mortgage rates, also higher home prices, is definitely putting a damper on demand. So is now a good time to buy a second home? It really depends what you're looking for. You know, if you're confident, you can make some of those family memories. You have extra money in your budget. You can afford surprise repairs. You're able to do your remote work from a different location. You're looking for some tax benefits. Yeah, it could be a good time for you. However, everyone's financial situation is different.
So if you're worried about your cash flow, you're worried about your job, you're worried about the potential consequences, of recession and you're struggling with rising prices and you're already having a difficult time making your primary mortgage, do not even consider a second home.
What unexpected repair and insurance costs do second homeowners commonly face?
So let's go into some of those financial pitfalls. A lot of people buy a second home thinking they can make an income off the rental when they're not there. Is that solid thinking?
Yeah, you may not make rental income at all.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–0:42
2
Why is fall and early winter the peak season for buying vacation homes?
0:42–1:20
3
How has the second-home market changed since the pandemic and what are current trends?
1:20–1:48
4
Is now a good time for me to buy a second home given mortgage rates and personal finances?
1:48–2:28
5
Can you reliably count on rental income to pay for a vacation property?
2:28–3:46
6
What unexpected repair and insurance costs do second homeowners commonly face?
3:46–4:51
7
How much cash reserve should vacation-home owners plan for emergencies?
4:51–6:03
8
What emotional and family conflicts can owning a vacation home create over time?
6:03–8:39
Speakers
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