Demand for Second Homes Ramps Up

Redfin has reported that the number of buyers who locked in mortgage rates for second homes soared 178% year-over-year in April, marking the 11th straight month of 80%-plus growth. Second-home mortgage rate locks are holding steady at more than double pre-pandemic levels. The rise in demand for second homes is more than twice the increase for primary homes, with the number of buyers who locked in mortgage rates for primary homes rising 78% year-over-year in April.

"The combination of the wealthy becoming wealthier, remote work turning into the new normal and low mortgage rates is creating an ideal environment for affluent Americans to buy vacation homes," said Redfin Chief Economist Daryl Fairweather. "As long as the economy continues to grow, I don't foresee demand for second homes slowing down anytime soon."

As more and more continue to have the freedom to work remotely and earn money from robust stock portfolios and rising home values, even as some offices start to reopen, many Americans plan to work remotely for the long term, at least part of the time.

Home prices in seasonal towns rose 27% year-over-year in April to $450,000. Prices in non-seasonal towns are up by a similar margin, at 28% to $419,000. Though those jumps are both the biggest on record, the increases are somewhat inflated because price growth was slow at this time last year due to stay-home orders and economic lockdowns related to the pandemic. Price growth for homes in seasonal towns started recovering last summer, and April 2021 marks the 10th straight month of 10%-plus year-over-year growth.

“I’m working with several second-home buyers right now, and a few other clients who are selling vacation homes that have been in the family for decades,” said Lisa C. Smith, a Redfin Real Estate Agent in Myrtle Beach, South Carolina. “The vacation rental market is predicted to be especially hot this summer because most people are still able to work remotely, and others are using vacation time they saved up at the height of the pandemic. A lot of investors are noticing the intensity of the rental market here and snapping up homes and condos for short-term rentals. They feel property is still affordable and taxes are cheaper in this area than other parts of the country. There are new listings hitting the market every day because homeowners are realizing now is a great time to sell their vacation properties. Sellers have seen prices go up, and many of them are able to sell and pocket the equity.”

Click here to read the full report by Dana Anderson, Data Journalist at Redfin.