If you've thought about buying a second home as a vacation property, now may be a good time to do so. According to a recent report by Redfin, second-home buyer demand is slowing down, which will open up more affordable inventory for those still in the market. And while buyer demand for second homes is decreasing, guest demand is still high, which is great news for those looking to make rental income off their vacation home, Vacasa reported.

Watch Out: 25 Cities With the Most Overpriced Homes
Read More:
17 Dumb Home-Buying Mistakes That Hurt Your Wallet

According to a recent Vacasa survey, most prospective buyers interested in purchasing a second home are looking to spend under $399,999, and 46% hope to generate rental income ASAP. Fortunately, many of the top places to buy a vacation home in 2021 — as determined by Vacasa based on home sales and vacation rental performance data from the last 12 months — meet these qualifications.

Take a look at the top 10 vacation rental markets.

Last updated: Nov. 4, 2021

10. Ludlow, Vermont
Median home price: $346,950
Annual gross rental revenue: $42,638
Vacation rental market cap rate: 5.2%
Ludlow appeals to vacationers with a love of the great outdoors, with Okemo Mountain Resort and Buttermilk Falls located nearby. With a relatively high vacation rental market cap rate, this New England locale earned the No. 10 spot on Vacasa's ranking.Avoid These: Craziest Things That Kill Your Home's Value

9. Seaside, Oregon
Median home price: $466,086
Annual gross rental revenue: $45,249
Vacation rental market cap rate: 5.2%
This coastal town is easily navigated by walking or biking, and is home to a 100-year-old promenade. Water enthusiasts can do plenty of surfing or kayaking here as well.Before You Buy: The Cost To Own a 3-Bedroom Home in Every State

8. Deep Creek Lake, Maryland
Median home price: $439,367
Annual gross rental revenue: $51,031
Vacation rental market cap rate: 5.7%
Deep Creek Lake is home to the state's largest inland lake for boating, tubing and waterskiing. During the winter months, it's a great place for skiing, snowboarding, snowshoeing and even going for sleigh rides.Don't Miss: 25 Tricks To Sell Your House for a Bigger Profit

7. Palm Springs, California
Median home price: $539,370
Annual gross rental revenue: $52,784
Vacation rental market cap rate: 5.9%
Palm Springs is an ever-popular vacation destination on the West Coast thanks to its mid-century modern homes and thriving downtown restaurant scene.City Living: 40 Top Cities Where Your Paycheck Goes the Furthest

6. Blue Ridge, Georgia
Median home price: $290,934
Annual gross rental revenue: $38,266
Vacation rental market cap rate: 6.1%
Located on the border of Georgia and Tennessee, Blue Ridge offers a number of outdoor activities for vacationers, from hiking to see one of its 16 waterfalls, going for horseback rides or attending one of its numerous fall orchard festivals.Did You Know? Best Place To Buy a Home in Every State

5. Norris Lake, Tennessee
Median home price: $343,907
Annual gross rental revenue: $42,450
Vacation rental market cap rate: 6.2%
Norris Lake boasts 52 square miles of fresh water, ideal for activities like stand-up paddleboarding, kayaking and wakeboarding. Plus, it's a short drive from Knoxville and all the attractions and amenities there.More: 8 Insider Tips To Get Rich in Real Estate

4. Dauphin Island, Alabama
Median home price: $382,699
Annual gross rental revenue: $43,371
Vacation rental market cap rate: 6.8%
Dauphin Island is a family-friendly beach destination. It's home to the Dauphin Island Sea Lab and the Audubon Bird Sanctuary, as well as uncrowded white sandy beaches.See: Real Estate Agents Reveal Their Secrets To Get Your Home Off the Market Fast

3. Gulf Shores, Alabama
Median home price: $402,905
Annual gross rental revenue: $46,107
Vacation rental market cap rate: 7.1%
Plenty of opportunities for water sports and a plethora of bars and restaurants make Gulf Shores an ideal vacation destination.Learn More: 50 Cities Where It's Cheaper To Buy a Home Than Rent

2. St. Augustine, Florida
Median home price: $365,576
Annual gross rental revenue: $46,557
Vacation rental market cap rate: 7.4%
Beautiful beaches and a downtown historic district attract many visitors to St. Augustine. It's also home to the No. 1 whiskey tour in America at the St. Augustine Distillery.Look: Home Renovations That Will Pay You Back 

1. Gatlinburg, Tennessee
Median home price: $320,111
Annual gross rental revenue: $47,328
Vacation rental market cap rate: 8.6%
With a median sale price of around $320,000 and a cap rate of 8.6%, Gatlinburg easily took the top spot on Vacasa's ranking. The Southern destination is home to Skylift Park — North America's longest pedestrian suspension bridge — and Anakeesta adventure park.More From GOBankingRates5 Things Most Americans Don't Know About Social Security
Social Security Benefits Might Get Cut Early — What Does It Mean for You?
Navy Federal cashRewards Review: With Great Benefits Come Great Rewards
15 Mortgage Questions To Ask Your Lender
Photo Disclaimer: Please note photos are for representational purposes only and may not reflect the exact location listed.

This article originally appeared on GOBankingRates.com: The 10 Best Places To Buy a Vacation Home in 2021

Source: Read Full Article