Sales of vacation properties are soaring as declining prices mean deals can be had and empty-nesters flood into the market. (Istock)

If you’re thinking about buying a vacation home, you aren’t alone.

Vacation home sales across the country are soaring, mainly for two reasons: Declining prices mean deals can be had, and empty nesters are flooding into the market.

Baby boomers looking ahead to their days of leisure are snapping up vacation homes at a faster pace than ever, particularly in beach resorts in the South and the West.

Vacation home sales rose by 57.4 percent in 2014 compared with 2013 and reached a record high, according to the National Association of Realtors (NAR).

In fact, vacation homes now represent 21 percent of all home sales, the highest share since NAR began tracking the market in 2003. An estimated 1.13 million vacation homes were purchased last year, up from 717,000 in 2013.

“There are several factors driving vacation home sales, but one of the main ones is pure demographics, with baby boomers nearing retirement age or already retired who plan to downsize,” says Jessica Lautz, director of surveys and communications for NAR in Washington. “One in five of vacation home buyers say they plan to live in the home full time in the future.”

But baby boomers aren’t the only ones getting into the game. Some younger families with investment income or home equity from appreciating home values are opting to purchase vacation homes to serve as a place to generate memories with their families, invest for the future and generate income from short-term rentals to offset their own vacation costs.

One-third of vacation home buyers plan to use their property as a family retreat and 13 percent bought for future price appreciation, according to NAR’s research.

“The rise in the stock market last year contributed to the spike in vacation home sales,” Lautz says. “Thirty percent of all vacation home sales were all-cash purchases, and even among those who financed their homes, 48 percent made a down payment of 30 percent or more.”

Lautz says these cash sales were a little easier to make because of the lower median cost of vacation homes, which declined 11.1 percent from $168,700 in 2013 to $150,000 in 2014 in spite of increased demand. She says 45 percent of vacation homes purchased in 2014 were distressed sales, meaning they were a foreclosure or short sale.

“People are also buying relatively small homes, with a median size of 1,500 square feet,” Lautz says. “Some choose to buy condos and townhouses, which are 46 percent of the market compared to 54 percent single-family homes.”

Popular markets

Buyers of vacation homes traditionally prefer to purchase a place close to their primary residence so they can get there on weekends with ease. But according to research by HomeAway, a vacation rental Web site, that pattern is changing.

The average vacation home purchase in 2013 was 322 miles from a primary residence, compared with 49 miles in 2003.

Beach resort properties are the most popular, attracting 40 percent of buyers, compared with 19 percent in the country and 17 percent in the mountains, according to NAR’s survey.

Here’s a look at a few resort communities across the nation and what you can find in those areas:

This contemporary-style waterfront house at 435 Hines Dr., Swanton, Md., listed for $899,000. It has four bedrooms, four bathrooms, multiple spaces for entertaining, two fireplaces, a spacious kitchen and water views from most rooms. Betsy Spiker Holcomb of Long & Foster is the listing agent. (Photo by Betsy Spiker Holcomb)

Deep Creek Lake in Maryland

Deep Creek Lake, which has a lake for boating, fishing and swimming and a mountainous ski resort, is a four-season vacation destination, says Betsy Spiker Holcomb, a real estate agent with Long & Foster in Deep Creek Lake.

“This is a unique area with the lake right at the base of ski resort,” Holcomb says. “We have some retirees who live here six months of the year, but most of our buyers are families with middle-aged parents and active kids. They learn to ski, to water-ski and wake-board, and then they want to come back every year.”

Holcomb says the typical pattern is for people to rent a vacation home in the area a few times and then decide they want to own.

“There are price points here for everyone from under $250,000 for a one- or two-bedroom condo to up to $3 million for a large waterfront home,” Holcomb says. “Right now the demand is highest for either something small under $350,000 or for a single-family home with four to six bedrooms on the lake with a private dock for two or three boats, which costs between $700,000 and $900,000.”

She says there are also waterfront townhouses priced around $350,000.

“Buyers looking for strong rental potential to offset their investment usually buy a larger home with four bedrooms or more so that several families can rent the home at once,” Holcomb says. “We have some single-family homes with eight bedrooms and an indoor pool so people can swim in winter.”

Holcomb says that 2014 was a record year in terms of the sales pace but that inventory is available so prices have remained stable.

This shingled Cape home at 35 Inlet Rd., Chatham, Mass. — which is close to the village, Stage Harbor Town Landing and Oyster Pond beach — has a deeded path to the Mitchell River for boating, a fireplace, hardwood flooring and space for expansion on the nearly one-acre lot. The four-bedroom, two-bathroom home is listed for $1.4 million. Timothy P. Bailey of John C. Ricotta & Associates is the listing agent. (Courtesy of John C. Ricotta & Associates )

Cape Cod, Mass.

The real estate market in Chatham, Mass., a resort town on the “elbow” of Cape Cod, stayed relatively stable during the recession without a drop in prices, just a slight slowdown in the pace of sales, says Timothy P. Bailey, a real estate agent with John C. Ricotta and Associates in Chatham.

“Our sales here are second homes for most people, so they’re using discretionary funds, so of course the economy has a big impact on the pace of sales,” Bailey says. “Most people view a purchase now as a good investment because there’s room for growth as the economy improves.”

Bailey says buyers in Chatham are split between young families who want quality time with their kids, pre-retirees who buy now and rent out the property to offset their costs until they retire and retirees who tend to spend part of the spring, summer and fall on the cape and have another home elsewhere.

“The most active market in Chatham right now is under $1 million, so those places sell very fast,” Bailey says. “There’s very little available at all under $500,000 in this area, except maybe some small cottages that need work.”

Among the 160 listings in the Chatham area in April, 80 were below $1.5 million and 80 were above that price. Just 40 homes were available for less than $800,000.

“Waterfront homes are typically $2 million and up, but one sold recently at $4.8 million,” Bailey says.

Bailey says there are three submarkets in Chatham: Chatham Village, for those who want to walk to shops and restaurants; North Chatham, which is more rural and popular with boaters because of its marinas; and South Chatham, which has beaches on Nantucket Sound that appeal to families with young children.

This four-bedroom, four-bathroom house has an upper-level space for gathering with friends and family and a deck with ocean views, a hot tub on the mid-level deck, covered deck areas for shade and an open top level deck for sun, a screened porch and a community pool and boardwalk to cross over for beach access. The home at 4914 Engagement Hill Loop, Nags Head, N.C., is listed for $519,900. Cheryl White of Century 21 Nachman Realty is the listing agent. (Courtesy of Cheryl White)

Outer Banks of North Carolina

The Outer Banks attracts many of its buyers from Northern Virginia and Washington because of the relatively easy drive to the area, says Cindy Edwards, managing broker of Century 21 Nachman Realty in Kitty Hawk.

“Land values are high here because we’re barrier islands and there’s no real room for expansion, but prices dropped during the economic downturn,” Edwards says. “Now we’re seeing some new construction, especially in Kill Devil Hills on the Albemarle Sound side of the island, priced in the $275,000-to-$375,000 range.”

Edwards says lots for building on the oceanfront side of the island range from $600,000 to more than $1 million. She says oceanfront resale properties are priced from $1.2 million for a smaller, older dwelling to $3.5 million for an eight-to-10-bedroom home.

“A big part of our market is people who spend the spring and fall here and then rent their home by the week in the summer to generate income,” Edwards says. “Most people come here and rent a few times and then want to buy something for around $300,000.”

“You can buy a sound-side home with 1,500 to 2,000 square feet with three or four bedrooms for that price,” she says. “On the ocean side you can get a similar home for $300,000 to $350,000 within a block or two of the beach.”

Edwards says most buyers are baby boomers who are five to 10 years away from retiring who plan to move in full time or sell the property when they retire. Most full-time residents in the Outer Banks opt to live on the sound side, she says, because the houses cost less and there’s less wind, which can be intense in the winter months.

“A lot of our buyers are interested in rental income from their vacation homes, so in that case it’s best to buy a five-to-eight-bedroom home on the ocean side within walking distance of the beach,” she says.

This two-bedroom, two-bathroom house at 105 Lakefront Way, Rancho Mirage, Calif., is listed for $475,000. It has an enclosed back yard, maintenance-free desert landscaping, a view of the mountains and is within walking distance of the Mission Hills Country Club. The living and dining area has a fireplace and a wet bar. Nancy Hankin of Re/Max is the listing agent. (Courtesy of Nancy Hankin)

Palm Springs, Calif.

A little farther afield from D.C. — but known as the “Playground of the Presidents” since Presidents Dwight Eisenhower, Gerald Ford and Ronald Reagan were frequent visitors — is Palm Springs, a California desert community with nine towns in the region, says Nancy Hankin, an associate broker with Re/Max in Palm Desert.

“Palm Springs became famous when the movie industry got started in California because directors told actors they had to stay within two or three hours of Hollywood in case they were needed,” Hankin says. “Development started on the western end of the desert and has gradually moved east. Each town has its own personality, but Indian Wells and Rancho Mirage are where you’ll find the most expensive homes.”

Hankin says there are more than 100 golf courses and tennis facilities in the area, a tram to the top of Mount Jacinto for hiking and views of the Coachella Valley. Skiing is available at Big Bear Mountain about 1.5 hours away.

“This area is popular with retirees, but we also have a lot of vacation homeowners from Los Angeles and the ocean areas who want to go to the desert on weekends to escape overcast winters,” Hankin says. “We have a lot of buyers from Canada and from Seattle, but in the last few years we’ve seen more buyers from the East Coast who love the lack of humidity and the lack of crowds.”

Proximity to Los Angeles brings entertainers to the area, along with symphonies and the opera. Hankin says the region has a “big-city personality with small-city amenities and a small-city atmosphere.”

Hankin says that while Palm Springs used to shut down in the summer because of the heat, most people today use their vacation homes year-round. However, she says the population doubles between October and April when the weather is best and the region hosts film and music festivals and tennis and golf tournaments.

While there are multimillion-dollar homes in the area, including a $39.5 million estate on two acres in La Quinta, some parts of the Palm Springs desert have surprisingly affordable homes. For instance, Hankin says buyers can find a remodeled two-bedroom, two-bathroom condo on the golf course in Palm Desert with 1,400 square feet for $217,900.

“The real estate market here is definitely slower, but it didn’t come to a halt,” Hankin says. “A lot of buyers here are investing for a long-term increase in value rather than just how often they can use the home right now.”

This three-bedroom, two-bathroom condo at 13070 Sandy Key Bend, No. 3602, North Fort Myers, Fla., is listed for $187,500. It is a first-floor “coach home” with a den, two-car garage and views of a lake with a fountain from nearly every room. The home is part of a community with resort-style amenities near downtown Fort Myers. Damon Vetere of Coldwell Banker Residential Brokerage is the listing agent. (Photo by Mark Bilger)

Fort Myers, Fla.

Florida buyers tend to be pre-retirees or retirees, says Damon Vetere, a real estate agent with Coldwell Banker Residential Brokerage in Fort Myers.

“I think I only worked with one family in the past year — the rest were pre-retirees buying homes and renting them out for part of the year for the income,” Vetere says. “They plan to move to Florida full time eventually.”

One group of buyers comes for an unusual reason: baseball.

“We get a lot of buyers from Minnesota and from Boston because the Twins and the Red Sox do their spring training here,” Vetere says. “People come to see that, and then they decide they like the area and want to own here.”

Other buyers come from the Midwest and Canada as well as the Northeast to buy homes in resort communities in Marco Island, Sanibel, Captiva and Naples, he says. New developments can be found in abundance throughout the area, and local economists anticipate the Fort Myers region will double in population over the next decade.

Vetere says that homes priced under $250,000, typically condos, townhouses or smaller single-family homes in good condition, sell immediately, often for an all-cash offer. He says that in some areas farther from the beach you can find a relatively new single-family home with 1,400 to 1,500 square feet and a swimming pool for under $250,000 but that prices have been rising steadily in recent months.

“In downtown Fort Myers, condo prices had dropped to $350,000 to $375,000 but are now back up to $500,000 to $600,000, higher than before the recession,” Vetere says.

While most people think of a vacation home as a luxury item reserved for the wealthy, prices that range from under $200,000 to more than $39 million in resort communities throughout the country mean there’s something for nearly every budget.

Michele Lerner is a freelance writer.

Tips for buying a vacation home

Keep in mind that you’ll need to pay property taxes and homeowners insurance on the second home. In addition, you could need pricey flood insurance if you buy near water.

You’ll need a plan for maintaining the property in your absence. If you hire a property management company, that could add to your costs. Moreover, if you plan to rent your home frequently, you also may want to work with a property management company to handle the rentals and maintain your home, which will reduce your rental income.

While your mortgage interest payments on a second home are tax deductible up to the first $1 million of financing, your tax situation changes depending on how much of the year you rent your property to tenants.