Is a Vacation Home Out of Your Client’s Reach, Or a Good Investment?

Taxes | March 14, 2025

Is a Vacation Home Out of Your Client’s Reach, Or a Good Investment?

Summer is approaching and it seems vacation homes are falling out of favor with homebuyers, according to a recent report from the real estate company Redfin.

By Diana Melichar, RA, LEED, AP.

Summer is approaching and it seems vacation homes are falling out of favor with homebuyers, according to a recent report from the real estate company Redfin. In 2023, says the report, homebuyers took out 40 percent fewer second home mortgages than they did in 2022. And 2022 was way below the pandemic bubble of second-home buying in 2021.

It’s no wonder. Typical vacation homes increased in cost, loan fees and mortgage rates climbed, and workers found themselves with much less latitude to work from home and live wherever they wanted, another trend that the pandemic accelerated.

Using vacation homes for short-term rental income is also becoming more difficult as localities adopt restrictions and there’s less money to be made. It can also be burdensome to maintain a vacation home, let alone spend hours driving to remote destinations, sometimes through metropolitan area traffic jams.

Instead, more and more of your clients could opt to make their principal residences into oases filled with activity zones, indoor-outdoor living features and a touch of luxury.  Although there is considerable cost associated with making these improvements to their properties, the price is far less than purchasing a second home and property. They could start planning now and be ready to build in later in the spring.

One of our my clients calls their retreat their “ESPN zone,” which includes a lap/play pool, a pickle ball/sport court, play yard for little ones and fire pit for roasting marshmallows. Their dream scheme also includes a party house with living/dining room, kitchen and upstairs bunkhouse bedrooms tucked under the roof for family reunion overnighters.

Other clients have included outdoor entertaining kitchens, fireplaces, swimming pools, terraces and pool pavilions for dining and lounging.

A client who lives near a lake decided on building a beach house on his property, as it is a private place that intimately communes with the water.  It stores lots of water toys at beach level — jet skis, kayaks, paddle boards and small water craft, in addition to beach toys like bean toss games, water mats, floaties, etc. Above, there is a screened porch, kitchenette, living area, and sleeping accommodations to enjoy those cool lake breezes and beautiful views year-round.

Whether you hire an architect to create your backyard retreat or go the DIY route, here are some things to consider.

What is the purpose of your backyard space?

Is it merely a place to retreat from the hustle and bustle of the family home, an extension of your home office, an adult playground with fitness stations, lap pool or maybe a climbing wall, or more of a spa-like atmosphere? If there’s to be an outdoor kitchen, you should bring in an expert when it comes to locating utilities and observing local fire codes.

How will you use the space, now and in the future?

You may have small children now, but children become teen-agers, and teen-agers like to hang out with their friends. In designing your space, think about the here and now (swing set for example) and the future (shady pergola, comfy chairs and meditation garden).

What’s your budget (the all-important question!)?

The nice thing about a project like this is that it doesn’t need to be done all at once. You can start with a patio and pergola and some seating options, and then add to it every year, keeping with your overall design and purpose.

When it comes to designs and amenities, I might recommend features like these to my clients:

Landscaping: Use existing and new landscaping to create privacy as well as beauty. Instead of water-hungry sod, consider a xeriscape design using native plants that will offer color year-‘round and be easier to maintain. Create pathways to protect plants.

Lighting and music: Nothing says fun like lighting: weather resistant fairy lights, strings of larger bulbs or fixed lighting in an indoor/outdoor space will invite you and your family to sit and stay.

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Sustainability: In construction materials and furniture, select items that will last season after season, as well as those made from recycled materials.

Safety: If you have a pool or spa, make sure that you can cover it when not in use so little ones can’t accidentally fall in. A motorized, retractable cover is really nice to have, especially since it insulates the pool at night and limits evaporation.

Shade: You and your guests must be able to retreat from the sun, whether it’s under a roof, an awning or an umbrella.

Water: You don’t need a pool or a hot tub to enjoy the presence of water. A well-designed pond with koi or a tinkling fountain can add depth to your enjoyment.

Fire: Another element that humans have sought since we wore animal skins and lived in caves. Consider a fire pit or fireplace to create a welcoming hangout – or just a place to roast marshmallows.

A backyard retreat can be grand or modest, relaxing or invigorating. Do it right, and you won’t have to vacate your home – instead, you can enjoy your staycations right in your own backyard any day of the year.

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Diana Melichar, RA, LEED, AP, is an advisor with Melichar Architects in Lake Forest, IL

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