All data compiled in this article is using the LuxuryFractionalGuide.com internal database of properties. Market statistics provided by Ragatz Associates.
Fractional property offers investors real estate ownership, while at the same time offering more vacation time or second home in a preferred location.
In recent years, fractional ownership has provided an alternative to timeshares and whole ownership of a vacation property.
From the mountains to the Pacific Ocean, the U.S market presents buyers with a variety of opportunities.
Overview of the 2018 market
Across the United States, there are currently (May 2018) 126 Active Fractional Properties – including equity funds that invest in vacation homes.
An active property refers to a resort or a development presently on the market or has multiple resales available for purchase.
Which locations have the most properties available?
Mountain States – such as Colorado, Utah, and Montana – have the most active properties with 38 available.
Closely followed by the Pacific States with 36 – think Washington, Oregon, and California.
In the South, investors have a selection of 19 properties.
The Midwest and the Northeast, active properties are lower – 19 and 10, respectively.
What each does each location offer vacationers?
Although property availability varies from coast to coast, each region has its unique qualities, activities, and landscapes.
In Colorado, in the U.S. Mountain Region, skiing attracts most visitors to the state with ski-in-and-out-homes and properties in exclusive mountain resorts.
While in the U.S. Pacific and U.S. South regions, the allure of the ocean – and golf in Florida – draw visitors to both locations
Move across to U.S. Northeast, and again, the slopes and apres ski offered by Vermont’s resorts – including Stowe and Jeffersonville – draw in the most significant number of visitors.
Finally, think of the Midwest, and days at lakeside spots in Michigan spring to mind. Those lake activities are the reason why many families and couples to purchase fractional ownership property there.
Primary Activity by U.S. Destination
|U.S. Pacific||Ocean & Golf|
|U.S. Midwest||Lake Activities|
Fractional Property Ownership by Price
Little Nell, a luxurious retreat nestled in the mountains of Aspen, Colorado, has a price tag out of reach to many. For an unbeatable location, property at Little Nell starts at
$1.3million for a 1/8 fraction of the property.
While Little Nell may remain a dream – fractional property ownership is often an affordable option with residences at all price brackets.
What are the most common fraction sizes across the country?
Fraction size varies from 1/4th to 1/13th ownership options.
By far the most common are 1/4th fraction size, with 25 properties currently active in the United States.
Investors in these properties have an estimated usage of 12 weeks per year – an enticing option for those from colder climates who want to escape the winter months.
Next, there are plenty of four and five-week usage options.
After ¼ ownership, there are 13 properties available with 1/10th ownership, which allow up to five weeks of usage per year.
2018 Breakdown by Fraction Size, Highest to Lowest.
Note, some of the resorts overlap and offer two or more fraction sizes for purchase.
|Fraction Size||Count of Properties||Estimated Usage|
Whether looking for longer-term usage of 10-12 weeks or shorter-term properties of 4-6 weeks, there is a similar number of properties on the market.
Currently, 29 properties are active for longer-term, while 39 properties with up to six weeks usage are on offer, right now.
|Usage Length||Properties Count|
|10-12 weeks per year||29|
|4-6 weeks per year||39|
For a more precise representation of the current property count, see the chart below.
Equity funds do not track properties by fraction size and are not reflected in the counts.
U.S. Fractional Ownership Properties and Usage Options.
With over 50% of fractional ownership properties offering 4-6 weeks per year, this is most common usage option available across the U.S. market. In second place, is 10-12 weeks per year.
Comparing fractional ownership with timeshares, for those who want to have use and occupy the properties for extended periods, fractional ownership presents more options than timeshares, which often give vacationers a set week per year to enjoy the property.
Fraction size is determined by the location
Visitor trends in each region and location determine the fraction sizes available to buyers.
Let’s take a look at the market in Palm Springs, California, for example, where each year the desert oasis receives an influx of visitors from Canada, escaping the long winters for the heat of Southern California. In Palm Springs, a one week, twelve times a year fraction would not be suitable for the demand; visitors from Canada travel for a prolonged stretch, not travelling back and forth between the two countries.
Any other current trends in the market?
According to the Ragatz Associates 2017 Fractional Ownership Survey, investors in fraction property ownership continue to favor new developments with modern facilities and amenities over older, resale properties, a fact visible across the U.S. market.
In total, new closed sales totaled $118 million, add to that presales on new developments of $22 million. On the resale market, that figure is $34 million.
Furthermore, the resale figures reveal that many buyers are holding onto the properties, another reason for so few options available for purchase on the market.
What do we think?
Fractional property ownership continues to attract investors in the United States, seeking alternatives to full vacation home ownership or timeshares.
While there are properties available across the United States, those looking for a mountain retreat have the most comprehensive choices available, in particular in the U.S. Mountain Region.
Investing in fractional property ownership presents opportunities for extended seasonal use than most one-week timeshare options.