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Owning a second home for either frequent weekend getaways or a long annual vacation sounds appealing, doesn’t it? It’s a concept that took off during the pandemic, when many of us adapted to a work-from-home lifestyle. Demand for second homes grew by 88% at the end of 2020 and throughout 2021, Redfin reported. If we could work from anywhere, why not invest in a beach or mountain retreat – or somewhere in between?
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While both higher home prices and interest rates than two years ago have slowed the trend, the demand for a vacation home still exceeds the pre-pandemic level, per Redfin. And if you’re shopping for a home, you’ll want to select a region that meets your interests – and also can bring a return on the rental market.
Hostaway, a vacation rental management platform, recently released its third annual list of the most coveted locations in the U.S. to buy a vacation home. It consists of both small towns and big cities.
“The bounce back of business travel may partially explain this, but also that consumers who didn’t want to travel to urban areas during COVID-19 are now confident to travel to cities again,” said Marcus Räder, CEO of Hostaway. “Cities tend not to be affected by seasonality as much as other locations, which makes them a safer bet for investors looking for a high annual occupancy rate and steady stream of income all year round.”
Using data concerning average home prices and monthly revenue potential from Hostaway and AirDNA, which is an intelligence platform for short-term rental hosts and investors, GOBankingRates compiled a list of 15 places you might want to check out if you’re in the market for a second home. The prospective rent totals are based on data from a 12-month period.
1. Branson, Missouri
Average home price: $259,000
Monthly revenue potential: $2,573
What do you crave in a vacation destination? Adventures? Live entertainment? Family activities? Branson checks all of those. You’ll find music galore at destinations from the American Bandstand Theater to Oak Ridge Boys Grand Theatre to the Dolly Parton Stampede Theater. And take the family to the Silver Dollar City amusement park or the water slides, with the most adventurous of you ziplining or riding the mountain coasters through the beautiful Ozarks.
2. Poconos, Pennsylvania
Average home price: $300,000
Monthly revenue potential: $4,228
The Poconos are in the northeastern part of Pennsylvania, making them an easy commute from New York and New Jersey for second-home owners or vacationers. The area is a four-season getaway, with blooming springs, summers on the lakes, leaf peeping the fall and skiing in the winter.
3. Nashville, Indiana
Average home price: $300,000
Monthly revenue potential: $4,717
The Music City, as Nashville, Tennessee, is known, is immensely popular among vacationers. But so is Nashville, Indiana, a village that also boasts music spots and theaters and sits about an hour south of Indianapolis. The hub of the historic Brown County Art Colony, Nashville has galleries and studios where visitors can watch the artists at work, then shop in some of the unique stores for antiques and crafts.
Pictured: Bloomington, Indiana
4. Orlando, Florida
Average home price: $376,000
Monthly revenue potential: $3,200
The Disney World Resort. Universal Orlando Resort. SeaWorld Orlando, Legoland Florida Resort. Need we say more?
5. Ruidoso, New Mexico
Median home value: $316,900
Rental yield: 8.08%
Owning a rental property in Palm Springs can add an average of $25,608 to your annual income. The Southern California desert city has 360 sunny days every year, and its vibrant downtown area has many chic restaurants and shopping destinations.
Pictured: Roswell, New Mexico
6. Phoenix, Arizona
Average home price: $445,000
Monthly revenue potential: $2,580
If you buy a vacation home in Phoenix, make sure it has a pool – or access to one. Not only will you be more comfortable in the searing summer desert heat, but prospective renters likely will require that amenity for their stay. You or renters can enjoy Phoenix for its access to spring training baseball, top-flight golf courses, restaurants and all that the fifth-largest city in the U.S. has to offer.
7. Denver, Colorado
Average home price: $563,000
Monthly revenue potential: $2,904
Another urban center, Denver offers the big-city experience along with plenty of recreational opportunities year round. The Mile High City and its surrounding areas are known for the famed Red Rocks Park & Amphitheatre, which has hosted some of the biggest musicians ever in concert, including The Beatles (1964) and U2 (1983). Ski the Rockies by day and follow the Denver Beer Trail to sample the city’s craft brews at night.
8. Miami, Florida
Average home price: $589,000
Monthly revenue potential: $3,345
Travel website Hopper certainly makes the case about the appeal of vacationing in Miami with its list of 10 things to do there. The list includes experiencing Cuban culture, sailing the Atlantic Ocean, enjoying the “fusion of flavors” in the dining scene, swimming year-round and letting loose in the “lap of luxury.”
9. Lake Tahoe, California, and Lake Tahoe, Nevada
Average home price: $1.5 million
Monthly revenue potential: $3,096
The massive lake that straddles the California-Nevada line is the largest Alphine lake in North America, with 75 miles of shoreline and measuring 1,645 feet deep, according to the Keep Tahoe Blue organization. The Sierra Nevada mountains provide a stunning backdrop for the lake, which combine to provide year-round recreational opportunities for vacationers. Oh, and on the Nevada side, hit the casinos after a day on the slopes.
10. Hilton Head Island, South Carolina
Average home price: $700,000
Monthly revenue potential: $4,434
Hilton Head, an island in South Carolina’s Low Country, is known for its beaches, golf and other outdoor adventures, including biking, walking along 60 miles of trails and fishing. It’s filled with historical attractions, too. Readers of Conde Nast Traveler named Hilton Head the best island in the United States in 2022, and it took that same honor from Travel+Leisure in 2021.
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11. Gatlinburg, Tennessee
Average home price: $775,000
Monthly revenue potential: $4,929
Here’s an attribute you won’t see written about any other locale on this list. If you vacation in Gatlinburg, you can take part in the First Independence Day Parade in the Nation, which kicks off every year on July 4 at 12:01 a.m. It’s so popular that you’ll need to get there way early to save your seat along the parade route. Still, there’s much more to do in Gatlinburg, which is a gateway to the Great Smoky Mountains National Park, including bird watching, horseback riding, ziplining and walking the SkyBridge, which at 680 feet is one of the longest pedestrian suspension bridges in North America.
12. Bend, Oregon
Average home price: $737,000
Monthly revenue potential: $3,600
Full-time residents love Bend for its outdoorsy and laid-back lifestyle, as well as its natural beauty. As the owner of a vacation home there, you undoubtedly would be charmed by that same appeal Enjoy the clear waters of the Deschutes River, snowshoe with Mount Bachelor in your sight or follow the Ale Trail in the place that calls itself the craft beer capital of the west.
13. Bardstown, Kentucky
Average home price: $182,000
Monthly revenue potential: $3,833
Head from the Ale Trail in Bend to the Bourbon Trail in Bardstown. The city, settled in 1780, has 11 distilleries within 16 miles, and the tourism people in Bardstown bill it as the Bourbon Capital of the World. If you’re not that interested in the bourbon scene, check out the historic buildings downtown, where the stagecoach stop from the 18th century is in use as a restaurant, tavern, and bed and breakfast. Bardstown has received the nod from more than a few national publications as the most beautiful small town in America. Note, the monthly rental potential estimate is from AirDNA, which calculated an annual revenue of $46,000 if the home were rented full-time through Airbnb.
14. Twin Harbors, Minnesota
Average home price: $245,000
Monthly revenue potential: $6,000
AirDNA says a property rented to travelers on a full-time basis in Two Harbors bring in an average of $72,000 per year. That’s because places to stay in Two Harbors are in high demand by people who want to experience of both the beauty of Lake Superior and the Northwoods of Minnesota. Outdoor happenings reign supreme, with activities such as boating and rock climbing at the top of the list.
Pictured: Duluth, Minnesota
15. North Woodstock, New Hampshire
Average home price: $285,000
Monthly revenue potential: $5,250
When the North Woodstock logging industry began to fade in the early 1900s, tourism took over. With people drawn by the White Mountain National Forest, the picturesque village remains a draw for vacationers – and the real estate is affordable with average home values of $285,000. If you rented your vacation home year-round, you could bring in $60,000 a year, per AirDNA. Shave some of the weeks off the schedule and save them for your personal retreat.
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Jami Farkas contributed to the reporting of this article.
Disclaimer: Photos are for representational purposes only.