Second Homes and Vacation Properties: Is Now the Time?

28 October 2025

Ever dreamt of sipping coffee on your front porch with a mountain view? Or maybe falling asleep to the sound of ocean waves just steps from your back door? You’re not alone. Many people are asking themselves the same question right now: _“Should I buy a second home or vacation property?”_ Whether it’s a beachfront retreat, a snowy cabin in the woods, or a condo in your favorite city, buying a second home is more than just a lifestyle choice—it can be a smart financial move.

But the bigger question still looms: Is now the time to make that leap?

Let’s dive into the details and find out if this is your moment to grab a slice of paradise.

What Exactly Is a Second Home?

Let’s clear this up first. A second home is typically a property you own in addition to your primary residence. It could be:

- A lake house you visit on weekends
- A ski cabin up north for winter escapes
- A city condo for business and pleasure
- A countryside cottage for those quiet getaways

Some folks buy second homes as vacation properties. Others see them as investment vehicles or even as future retirement spots.

But regardless of why you're considering it, it’s important to understand what owning a second property really means—from cost to upkeep to tax implications.

Why Are Second Homes So Popular Right Now?

1. Remote Work Has Changed the Game

Remember when we all used to be chained to our office desks? Those days are fading fast. With remote and hybrid work becoming the norm, more people are realizing they don’t need to live full-time in one place. You can spend the workweek in the city and your weekends in the mountains—or vice versa.

2. Rising Home Equity

Homeowners have been sitting on a goldmine. Thanks to high demand and limited inventory, home values have soared since 2020. That means many people now have more equity to tap into—money that could easily go toward a down payment on a second home.

3. A Safe Haven for Savings

Unlike the stock market, which can feel like a rollercoaster, real estate is often viewed as a safer, more stable investment. When you own a vacation property, you're not just dumping your money into some abstract fund—you’re putting it into something tangible that also brings personal joy.

The Financial Ups and Downs

Let’s be real. Buying a second home isn’t for everyone—it takes more than just daydreaming about margaritas on the beach.

The Costs You Need to Watch

Here’s what you’ll need to budget for:

- Down payment: Often 10–25%, and sometimes more for second homes.
- Mortgage interest: Rates for second homes can be higher than for primary residences.
- Property taxes: Varies by location, but don't assume it's going to be cheap.
- Insurance: Vacation properties may need extra coverage, especially in flood or hurricane zones.
- Maintenance & repairs: That dreamy mountain cabin? It also needs a new roof eventually.

Potential Income

The bright side? You could make money. If you rent it out when you’re not using it, you could generate passive income that helps cover the mortgage and even turns a profit.

Just remember—rental income isn’t always consistent, and managing a property, especially from afar, can be a full-time job in itself. Many folks hire property management companies, but that, of course, comes with a fee.

Where Should You Look?

Location is everything when it comes to real estate. And when we’re talking second homes, that rule matters even more.

Top Destinations for Vacation Properties

Here are a few types of spots people gravitate toward:

- Beach towns – Think Cape Cod, the Carolinas, Florida, or the Gulf Coast.
- Mountain regions – Colorado, Utah, the Smoky Mountains, or the Adirondacks.
- Lakeside escapes – Upstate New York, Minnesota, Michigan, or Wisconsin.
- Urban getaways – Think NYC pied-à-terres, downtown condos in Austin or Seattle.
- Desert retreats – Palm Springs, Scottsdale, or parts of Nevada.

What to Consider When Choosing a Location

- Proximity to your primary home – Can you realistically get there for the weekend?
- Local rental laws – Some towns restrict short-term rentals like Airbnb.
- Weather and climate risks – Wildfire zones, floodplains, or hurricane-prone areas may come with higher insurance and maintenance costs.
- Resale value – Is the area growing in popularity or stagnating?

Is the Market Right?

Home Prices: Rising or Cooling?

After two red-hot years, home prices are cooling slightly in some markets. That might sound like bad news, but for buyers, it actually opens up opportunities. Fewer bidding wars mean you’ll have more room to negotiate.

However, desirable vacation spots still hold strong value. In high-demand areas, prices may still be climbing—even if the pace has slowed.

Mortgage Rates: A Double-Edged Sword

Interest rates have gone up compared to a few years ago. That affects your monthly payments big time. But here’s a twist: Higher rates also mean less competition. That cute lake house you had your eye on? You might actually stand a chance now without having to bid $50K over asking.

Renting Out Your Second Home

If you’re not going to use your vacation property year-round, renting it out makes a lot of sense.

Short-Term vs. Long-Term Rentals

- Short-term (Airbnb, VRBO): Higher nightly income potential but more work and turnover.
- Long-term tenants: More stable, fixed monthly income but less flexibility in using your home.

Know the Legal Stuff

Before you start counting rental income, check:

- Local zoning and short-term rental laws
- HOA rules
- Insurance coverage for renters
- Income tax implications

Trust me—you don’t want to get dinged with a fine or lawsuit just because you skipped the fine print.

Tax Benefits and Risks

Buying a second home comes with its own set of tax perks... and pitfalls.

The Good News

- Mortgage interest and property taxes may be deductible (if you itemize).
- You may get depreciation benefits if the home is classified as a rental.

The Not-so-Good News

- You’ll have to report rental income to the IRS if you rent it out for more than 14 days a year.
- You may face capital gains if the property appreciates and you eventually sell it.

Definitely talk to a tax professional before jumping in. The rules can get tricky, and you don’t want to be surprised come April.

Lifestyle Perks You Can’t Ignore

Sure, the finances matter. But owning a second home is also about quality of life.

Imagine always having a place to escape to—without worrying about hotel bookings or inflated vacation costs. You could build family traditions, host friends, or even turn the property into your full-time home someday.

Plus, there's a sense of pride and peace that comes from owning something that’s both yours and special.

Red Flags to Watch For

Before you fall too hard for that Instagram-worthy A-frame in the woods, here are a few warning signs:

- Overpriced listings in popular areas where supply is limited
- High HOA fees that eat into your profit or budget
- Maintenance nightmares for older homes that haven’t been updated
- Accessibility issues (no winter road access? Not ideal.)
- Over-reliance on rental income to cover your mortgage

Go in with your eyes wide open. A dream home can quickly turn into a money pit if you're not careful.

So, Is Now the Time?

Let’s circle back to the big question: is now the right time to buy a second home?

Like most things in real estate, the answer is—it depends.

If you’re financially stable, have good credit, and are looking to invest in your lifestyle as well as your future, this may be a great time to buy. Inventory is opening up, and while interest rates are higher than they’ve been, they may continue to rise. Waiting could cost more in the long run.

On the flip side, if your budget is tight, or you're relying solely on rental income to afford the place, it might be worth holding off or proceeding with caution.

At the end of the day, a second home should be a source of joy, not stress. Make sure you’re ready for the commitment—financially and emotionally.

Final Thoughts

Buying a second home isn’t just about real estate—it’s about building a life you love. Whether you want a peaceful hideaway, a bustling weekend retreat, or a smart investment you can enjoy, the key is preparation.

Ask yourself: What are my goals? Can I afford it long term? And will this bring me happiness and add value to my life?

If the answer is yes… then maybe now is the time to make that dream getaway your own reality.