Worst Vacation Home Locations

Last Updated Jun 10, 2010 6:41 PM EDT

Where is the best vacation home location?
Most real estate agents and investors will say there are no "worst" vacation home locations, because there will always be someone who wants to travel to a specific locations for their own personal reasons.

Maybe they have family in the area, or maybe they're the kid of people who enjoy hanging out in Death Valley in the middle of August, when temperatures reach 114F in the shade. (That would be us, by the way. Death Valley and Las Vegas in August are two of our favorite summer destinations.)

Still, if you're looking to invest in vacation home properties and rent them out while you're waiting for what you hope will be positive price appreciation (don't count on it in the short run), then there are certainly better and worse locations, and better and worse properties within a single location.

What makes a vacation home location less than optimal?

  • Rentability: Either there are too many similar homes on the market or demand from travelers is low. Either way, the rental price is depressed.
  • Seasonality: You can only rent it out for limited periods during the year.
  • Expensive real estate: The price to purchase far exceeds how much you can get for a rental.
  • Perception problems: If travelers think an area is problematic, they'll choose another destination, even if your particular neighborhood is great. So, some travelers might eliminate the entire Gulf coast when looking for a vacation destination, even if oil has not contaminated some parts of the coastline.
Although the folks at HomeAway.com don't believe in "worst" locations, they were kind enough to share their suggestions for some of the least popular vacation home destinations based on these factors:

Worst Vacation Home Location: Lubec, Maine

If you're looking for wide open beaches, three state parks, a wildlife refuge, whales and porpoises, check out Lubec, Maine. Although it is a fantastic vacation home destination for travelers who like wildlife (you might see moose, eagles, and bears roaming around) and outdoor adventures (hiking, camping, kayaking, and more), HomeAway says that Acadia homes tend to be short seasonal rentals, with little demand from travelers.

That seems right, given the eminently reasonable prices at some of the 32 Lubec listings on HomeAway.com.

Still, this charming oceanfront Victorian can sleep four, offers a relatively updated kitchen, and is located steps from the beach. Cost: $225 per night or $850 to $1,100 per week.

Worst Vacation Home Location: San Jose, California

Although my great aunt and uncle lived in San Jose for forty years, it sees far less demand from travelers when compared to other California cities such as San Francisco, Anaheim (hello, Walt Disney!), Santa Monica, and Los Angeles. And, don't forget about Sonoma County and Napa Valley.

The other problem is that San Jose isn't the sleepy little town it used to be. So, it has a higher cost of real estate without nearly as much rentability. HomeAway only has 10 listings for San Jose, and some of those aren't really in the city.

But if you have the bucks and you really want to visit, check out this stunning 10,000 square foot San Jose vacation rental that has 7 bedrooms, 6 full (check out the master bath at the right!) and 2 half baths, and sleeps 26 in beds (plus loads of room for pullouts) with 360 degree views of the city.

All this can be yours for $1,325 to $1,500 per night, or $9,500 per week. Might be a cool place for a weekend wedding.

Worst Vacation Home Location: Sunset Beach, North Carolina

The Colony II at Oyster Bay was built in 2006, at the height of the housing boom. And, there are plenty of new-looking condos in the building to rent at fabulous prices.

That might make it a great choice for travelers looking for a bit of pristine beach and a cheap stay, but it points to a problem for those buyers looking to purchase property in the Sunset Beach, North Carolina area.

HomeAway reports that there has been greater growth in vacation home listings than in traveler demand for this destination. An unbalanced supply of listings helps create a buyer's market.

In short, you'll get a lot of rental house for your money if you're a traveler. But if you want to buy something, you probably won't get enough rental demand.

Plus, if too many units in a condo building are rented out or have owners who are behind in their monthly assessments, it will be tough to get financing to buy a unit.

Still, the beach is lovely (see photo at right) and it would be tough to pay less for a vacation rental. For this 3-bedroom, 2-bath property (sleeps six) that's about two miles from Sunset Beach, you'd pay $60 to $85 per night, $350 to $830 per week, or $975 per month.

What best and worst vacation home locations have you found?

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Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com.
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    Ilyce R. Glink is an award-winning, nationally-syndicated columnist, best-selling book author and founder of Best Money Moves, an employee benefit program that helps reduce financial stress. She also owns ThinkGlink.com, where readers can find real estate and personal finance resources.