2021: Top 25 best places to buy a vacation home

The red-hot real estate market of the past year may be starting to cool ever so slightly, but consumer demand for vacation rental real estate is still burning bright. If you’re in the market for a vacation rental property or second home, read on as we outline the Top 25 Best Places to Buy a Vacation Home. From coast to coast, we rank our top 25 markets based on cap rate, or rate of return on your investment, and provide helpful data points including median home sale price and annual gross rental revenue.

Today’s vacation rental real estate market Overall buyer demand is decreasing, creating more opportunity According to a June 2021 report, second home buyer demand is starting to taper off a bit from its earlier peak, which will open up more affordable inventory for those still in the market. This slight dip in demand is due to many buyers having already purchased a second home over the past 18 months, and uncertainty about the need to return to offices and schools.

Guest demand is high Guest demand for vacation rentals remains incredibly high across the country, driving up year-over-year occupancy and rates. It’s a great time to get into the vacation home market and capitalize on the opportunity, if you intend to rent your home.

More vacation rentals and investment properties As a result of this demand, we’re seeing more first-time real estate investors and second home owners renting out their properties for the first time. But don’t worry, there’s a critical need for supply in many areas throughout the country.

Buyers want to spend under $399,999 Vacasa’s 2021 Vacation Rental Buyer Report revealed that most buyers (36.4%) currently in the market are looking to spend under $399,999, which aligns nicely with median home sale prices in many of our 25 best places to buy.

Buyers want immediate rental income from their investments In the same report, 46% of buyers said they’re looking to start generating income today, which is exactly where Vacasa can help—offering full-service vacation rental management.

Top 25 markets for buying a vacation home in 2021

Market Cap rate Median home sale price

1 Gatlinburg, T 8.6% $320,111

2 St. Augustine, FL 7.4% $365,576

3 Gulf Shores, AL 7.1% $402,905

4 Dauphin Island, AL 6.8% $382,699

5 Norris Lake, TN 6.2% $343,907

6 Blue Ridge, GA 6.1% $290,934

7 Palm Springs, CA 5.9% $539,370

8 Deep Creek Lake, MD 5.7% $439,367

9 Seaside, OR 5.2% $466,086

10 Ludlow, VT 5.2% $346,950

11Big Bear, CA 5.1% $372,667

12 Rockaway Beach, OR 5.0% $330,831

13 Cle Elum, WA 4.8% $551,586

14 Big Sky, MT 4.8% $850,000

15 Twentynine Palms, CA 4.8% $263,897

16 Killington, VT 4.7% $317,336

17 Bear Lake, UT 4.6% $383,734

18 Litchfield Beach, SC 4.5% $499,259

19 Pagosa Springs, CO 4.3% $361,320

20 Banner Elk, NC 4.3% $331,290

21 St. George Island, FL 4.2% $471,501

22 Ellijay, GA 4.2% $281,402

23 Florissant, CO 4.0% $367,000

24 Corolla 3.9% $608,953

25 Holden Beach, NC 3.4% $580,847

COVID-19 disclaimer: Indoor and outdoor attractions, restaurants, bars, ski villages, events, and festivals mentioned within local market descriptions may be closed or cancelled, or may have limited service due to COVID-19. Before visiting, you are encouraged to check local regulations for the latest information.

1. Gatlinburg, Tennessee Our number four market in 2020 has climbed the ranks, claiming the top spot on this year’s Top 25 Best Places to Buy a Vacation Home report. And with a median sale price around $320,000 and a cap rate of 8.6%, it’s easy to see why. Gatlinburg has plenty to offer guests, including the world famous Skylift Park, where visitors can walk North America’s longest pedestrian suspension bridge. At the bridge’s center, more than 30 feet of glass panels serve as the floor, giving guests a thrilling view of the nature below. But don’t fret if you aren’t one for heights. Those who opt not to cross can take in views from the safety of the SkyDeck. Another big draw for tourists? The Anakeesta adventure park features everything from cozy fire pits to dueling zip lines. Explore Gatlinburg Vacation Homes

Cap rate8.6%Median home price$320,111Annual gross rental revenue$47,328

2. St. Augustine, Florida Many destinations in Florida have made our Best Places to Buy reports over the years, but St. Augustine makes its debut appearance in 2021 (coming in at number two, no less). While plenty of guests flock to St. Augustine for its pristine beaches, others come for the history and European flavor this destination has to offer. Stroll downtown’s historic district or take in a bigger piece of history with a visit to Castillo de San Marcos, the oldest masonry fort in the continental United States and a major draw for guests. Of course, St. Augustine is also a premier destination for optimal relaxation. Catch a sunset cruise or visit the St. Augustine Distillery, which boasts the #1 whiskey tour in North America. Explore St. Augustine Vacation Homes

Cap rate7.4%Median home price$365,576Annual gross rental revenue$46,557

3. Gulf Shores, Alabama While Gulf Shores is known for just about every water sport imaginable, it’s also home to a few famous bars and restaurants, perfect for snapping a selfie just to prove you were there. Hit up The Hangout Restaurant—inspiration for The Hangout Festival, which brings hordes of travelers (and famous musicians) each spring. Then pop over to Lulu’s, owned and operated by none other than Jimmy Buffett’s sister, Lucy. A sprawling sandy obstacle course will keep the children entertained, while adults enjoy live music, which is a staple around Gulf Shores. If you’re in the market to purchase a vacation home in Gulf Shores, we expect it’ll set you back just over $400,000—but with a 7.1% cap rate, you can easily offset costs. Explore Gulf Shores Vacation Homes

Cap rate7.1%Median home price$402,905Annual gross rental revenue$46,107

4. Dauphin Island, Alabama According to visitors, Dauphin Island is one of those rare places where you feel relaxed immediately upon arrival. It’s also known as one of the most family-friendly destinations in the southeast, so kids will have plenty of activities to keep them entertained—including day trips to the Estuarium at the Dauphin Island Sea Lab and the Audubon Bird Sanctuary. After some educational fun, let them blow off steam on the white sandy stretches that flank the island and dip into the crystal-clear waters. Dauphin Island’s beaches are quiet and uncrowded, which makes it an ideal destination for good old-fashioned sand castle building or catching up on a good read. This island oasis earns the number four spot with a 6.8% cap rate. Explore Dauphin Island Vacation Homes

Cap rate6.8%Median home price$382,699Annual gross rental revenue$43,371

5. Norris Lake, Tennessee Norris Lake came in at number two on our 2021 Best Places to Buy a Lake House report—and now, in its first appearance in our Top 25 report, it rounds out the top five with a 6.2% cap rate. Guests come to Norris Lake for the main attraction: 52 square miles of freshwater, perfect for activities like stand-up paddleboarding, kayaking, and wakeboarding. Drop a line in at Gibbs Ferry or Cove Lake State Park, or just sit back and enjoy the stunning views with a picnic basket in tow. Guests who feel like kicking up their heels can do so in nearby Knoxville, a short drive from Norris Lake. There, Market Square is lined with shops and restaurants, as well as entertainment options both indoor and out. Explore Norris Lake Vacation Homes

Cap rate6.2%Median home price$343,907Annual gross rental revenue$42,450*

6. Blue Ridge, Georgia Any destination where you can stand in two states at once is always a draw, right? Guests in Blue Ridge can do just that, with one foot in Georgia and the other just north in Tennessee. But after that photo op is complete, guests can dive into the lush nature and all the activities Blue Ridge has to offer. There are so many memorable experiences to have in the Peach State—like chasing one of the 16 waterfalls found along popular hiking trails, horseback riding among the rolling hills, and catching some fresh trout to throw on the grill of your vacation home. In the Peach State, oddly enough, it’s apples that draw visitors in the fall, with a plethora of orchard festivals. Owning a vacation home in Blue Ridge will run you just under $300,000—how do you like them apples? Explore Blue Ridge Vacation Homes

Cap rate6.1%Median home price$290,934Annual gross rental revenue$38,266*

7. Palm Springs, California There’s really no place like Palm Springs, which is why it’s one of the most popular vacation destinations on the West Coast. Maybe it’s the mid-century modern architecture of many vacation homes that draws people in and takes them back in time. Or maybe it’s the hikes through the desert, where you can catch a glimpse of a bighorn sheep hiding from the heat in the rocky formations. Then again, it could be the smiling faces at the outdoor restaurants and bars that line downtown, ready to serve patrons a cold drink and a snack. Whatever it is, Palm Springs proper lands at number seven on our list, with a median home price of approximately $539,000 and a cap rate of 5.9%. Explore Palm Springs Vacation Homes

Cap rate5.9%Median home price$539,370Annual gross rental revenue$52,784

8. Deep Creek Lake, Maryland While most vacation destinations have worthwhile activities and attractions year-round, Deep Creek Lake is one of those places that truly offers four-season fun. In the summer months, guests can take to the state’s largest inland lake for boating, tubing, and waterskiing. In the winter months, skiers and snowboarders escape to Wisp Resort in the Western Maryland mountains, where they can glide down 33 slopes totaling 11 miles of terrain. For those who opt out of hitting the slopes, there are plenty of other winter activities—including hiking to the waterfalls at Swallow Falls State Park, partaking in a guided snowshoe tour, and even slushing through the snow on a festive sleigh ride. Explore Deep Creek Lake Vacation Homes

Cap rate5.7%Median home price$439,367Annual gross rental revenue$51,031*

9. Seaside, Oregon In this small coastal Oregon town, storm watching may be more common than sunbathing, but there are still plenty of reasons to visit Seaside. For guests needing to stretch their legs, the entire town is walkable or bikeable, and there’s plenty to explore without leaving the area (though side trips to other coastal communities are also a great way to spend the day). A must-do is to simply stroll Seaside’s 100-year-old promenade, taking in views of oceanfront homes—many of them investment properties—and local landmarks. Stop by the Seaside Aquarium to feed the seals, who each have their own unique ways to get your attention. Those who want to spend time in the water will find waves ripe for surfing and a bay ideal for kayaking. With a 5.2% cap rate, homeowners in Seaside can enjoy approximately $45,000 annual gross rental revenue. Explore Seaside Vacation Homes

Cap rate5.2%Median home price$466,086Annual gross rental revenue$45,249

10. Ludlow, Vermont Frequently included in our Best Places to Buy a Winter Vacation Home report, Ludlow draws guests in search of the great outdoors—and boy, do they get a healthy dose. The Okemo Mountain Resort is a true winter wonderland, with world-class amenities and different terrain for all levels of skiers and snowboarders. Another spot that attracts guests year-round is Buttermilk Falls, a series of three waterfalls and various swimming holes where summer revelers can take a dip. But if you really want to absorb the local culture in Ludlow, look no further than the Green Mountain Sugar House. Each weekend, the sugar house offers visitors complimentary sugar on the snow, maple cream donuts, maple coffee, and even maple milk. This sweet vacation rental market boasts a cap rate of 5.2%. Explore Ludlow Vacation Homes

Cap rate5.2%Median home price$346,950Annual gross rental revenue$42,638*

Our methodology To determine its ranking of top vacation rental markets, Vacasa analyzed home sales and vacation rental performance data from the last twelve months for vacation destinations throughout the country where Vacasa and its licensed subsidiaries manage vacation rentals. *To determine average gross rental income (homeowner revenue made from bookings, excluding any fees) for a market, we used actual performance data for the market as a whole, where available, except that Vacasa-only data was used for markets where Vacasa manages more than 50 units and actual Vacasa rental performance beats the market average by at least 25%. To calculate average cap rate, we considered the averages of the following in each market: property taxes, utilities, HOA fees, insurance, and property management fees.

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**This document is for information and illustrative purposes only. It is not intended to provide “investment advice” or a “recommendation” regarding a course of action. The discussion is general in nature and has not taken into account your personal financial position or objectives. You should consult a licensed financial advisor or other professional to discuss your specific situation.

Estimated rental income figures and home sale prices are based on averages for a given market for the prior 12 months ; for any specific property, the actual revenue, purchase price, and cap rate may differ materially from estimated amounts and depend on a wide range of factors outside Vacasa's knowledge or control, such as the property's condition, layout, and furnishings; expenses associated with the acquisition and ownership of the property (such as property taxes, utility fees, HOA fees, insurance fees, and mortgage-related expenses); rental calendar availability; existing and future regulations; current and future economic, social, and political trends and conditions; and weather and environmental factors. These estimates do not take into account the potential impact of state income taxes.

Many locations restrict or impose conditions on the use of properties as vacation rentals, or restrict vacation rentals to certain defined areas. Before purchasing a particular property as a potential vacation rental a buyer should confirm that the property can legally be used for this purpose.

Vacasa makes no representations or warranties, express or implied, about the accuracy of this document. Furthermore, Vacasa has no obligation to update, modify or amend this document or to otherwise notify users in the event that any opinion, assumption, forecast or estimate set forth herein changes or subsequently becomes inaccurate. Therefore, you should not place undue reliance on statements in this document.

**ADAPTED FROM WWW.VACASA.COM