Vacation homes and regional economic development

Abstract

This paper studies the relationship between vacation homes and regional development. Vacation homes are often in peripheral regions with relatively low standards of living. Seasonal residents contribute income to these areas but make local housing costlier and may have negative effects on local housing, labour, and product markets. The paper introduces a model that demonstrates how demand for housing from seasonal residents affects the welfare of local residents. It then studies the effects of a Norwegian policy that obliges homeowners in certain municipalities to reside on their properties. The policy is shown to increase local population, employment, wages and house prices.

The economics of second-home tourism: Are there expenditure reallocation effects from accommodation savings?

“…Our results indicate that domestic tourists at second homes are the least profitable segment at both the intensive and the extensive margins. In line with Sheard (2019), second-home tourism in Spain mainly involves cheap outdoor activities and home-prepared meals that contribute little to the local economy. Aside from other potential indirect benefits for local economies discussed before, tourists at second residences behave closer to residents than to tourists; they do not seem to stimulate demand in linked sectors because they have distinct motivations than ordinary tourists.…”

“…Countries like France or Sweden have implemented taxing policies, constraints on new second home investments, or restrictions on the ownership of second dwellings by non-residents to deal with the housing affordability problems that second homes are generating in some areas (Hilber and Schöni, 2020; Segú, 2020; Sheard, 2019). These policies must be carefully designed and implemented since they can adversely affect local labour markets and increase tourist accommodation prices.…”

“…Second-home tourism has important positive impacts on tourist destinations in terms of greater employment (Hilber and Schöni, 2020; Hoogendoorn and Visser, 2010), spending in local businesses (De-Juan Vigaray et al, 2021) and word of mouth (McLeod and Busser, 2012). A theoretical characterisation of their contribution to local economies is presented in Sheard (2019). Although their travel motivations typically differ from those of ordinary tourists, those staying at second residences are a relevant market for nature-based activities (Tangeland et al, 2013) and coastal recreation (Bujosa et al, 2015), and generally represent an important source of income for regional economies (Velvin et al, 2013).…”

Building an Island of Sustainability in a Sea of Unsustainability? A Study of Two Ecovillages

“…Consequently, housing and land prices have increased significantly in many urban areas, making these areas inaccessible for people with lower incomes. Investing in vacation homes has also become more popular [37]. Sheard [37] shows how vacation homes are often located in peripheral areas with lower standards of living and result in negative consequences for the local population by raising the cost of local housing and hurting the local labor and product markets.…”

“…Investing in vacation homes has also become more popular [37]. Sheard [37] shows how vacation homes are often located in peripheral areas with lower standards of living and result in negative consequences for the local population by raising the cost of local housing and hurting the local labor and product markets. His study also shows that policy responses such as requiring homeowners to reside in these houses have dampened some of the negative impacts.…”