I Waited on Buying a Vacation Home and Lost Out Big Time. Here's Why

When my husband and I bought our house, we intentionally chose a home at the low end of our price range so we'd have smaller mortgage payments. We figured that this way, we'd have the ability to save for other goals.

One of those goals has, for me, always been buying a vacation home. There's a specific area in Upstate New York where I've dreamed of owning a small cottage or cabin. And in 2019, I was tempted to take the plunge.

At that time, it would've cost about $250,000 to $300,000 to purchase a property I would've been happy with. I had enough cash in my savings account for a down payment and a little extra to cover things like repairs and improvements.

But I got nervous and decided to put off that purchase for a year so I could save some more. That decision, however, may have rendered my goal of owning a home up there unattainable.

The housing market exploded

We all know what happened in 2020, so there's no need to rehash the horror that was the pandemic, social distancing, remote school, and record-high unemployment. But another big thing that happened in 2020 was that mortgage lenders started slashing interest rates to entice borrowers to sign loans at a time when the U.S. economy was in shambles.

Because of this, buyer demand soared. And home prices quickly followed suit. Suddenly, there I was a year later, looking at prices in the $450,000 to $500,000 range when just a year prior, they'd been way lower.

Now, a big reason home prices blew up in that area in particular is that it's very remote. And in an age of social distancing, that was a huge draw.

I didn't panic, because I assumed that mortgage rates wouldn't stay low forever, and that home prices would start to come down once the market cooled off. Only that never happened. And to this day, I'm looking at paying $450,000 to $500,000 for a home that, had I moved forward with in 2019, would've cost $250,000 to $300,000.

A big reason those extremely elevated prices have been sustainable is that the area in question has always had pretty limited inventory. Granted, U.S. inventory happens to be low on a whole right now. As of late October, there was only a 3.6-month supply of available homes nationwide, according to the National Association of Realtors. It commonly takes a six-month supply of homes to even out the housing market and meet buyer demand.

But up where I want to buy, inventory is now practically non-existent. So when a home does become available, the seller can pretty much charge what they want. But since those elevated home prices seem like a permanent thing, buying my vacation home has pretty much become a lost cause.

Frankly, I can't comfortably afford to buy at today's levels. And even if I could, I just don't think I can bring myself to pay almost double for a home knowing what I would've paid just a few years ago.

I learned my lesson, though I didn't necessarily make a big mistake

One of the things I've learned from this experience is that sometimes, when an opportunity to meet a lifelong goal arises, you take it. At the same time, I don't exactly think it was irresponsible of me to err on the side of padding my savings before buying a second home. And I certainly could not predict back in 2019 that the following year, a pandemic would strike, I'd be running elementary school classrooms out of my basement, and the housing market in my favorite vacation spot would be permanently altered.

It's also, to be fair, a bit premature to say that home prices in the area will never come back down to earth. But based on discussions I've had with real estate agents up there, it's looking like that may be the case.

You may be reading this thinking, "Boo hoo, so you can't buy your second home." I completely recognize that many people can't even afford a first home. Heck, many people can't even afford the rent on a tiny studio apartment, so I realize I'm in a privileged position to be in a situation where I'm bemoaning my inability to buy a vacation home.

But to be fair to me, nobody gave me the money for a down payment on a second home. I spent many years working 60-plus hours a week to boost my earnings and savings. This was a goal of mine that I earned that's become unattainable, and I have the right to be disappointed.

You, similarly, may be disappointed that you've been unable to buy a home in the wake of the red-hot housing market that arrived during the latter part of 2020 and never fully cooled off. Thankfully, unlike my would-be vacation home area, housing inventory should eventually pick up on a national level. Once that happens, you may find that home prices start to come down and that it's easier to find an affordable place to buy.

Of course, inventory might pick up in some areas sooner than others. Your best bet is to partner up with a local real estate agent who can keep you in the loop. That way, you'll know when it's a good time to make a move.