A new report from Redfin has found that demand for second homes fell 21% year-over-year in July, marking the second consecutive month of annual declines in mortgage-purchase locks, following 13 months of surging activity in second-home purchases.
Demand for primary home purchases fell by 4% year over year in July, marking the first time the growth rate for second-home demand fell behind that of primary homes since April 2020. Soaring home prices is forcing some prospective second-home buyers to reconsider their plans. As of June, home prices were up 25% to record highs, but have since begun to plateau.
Mortgage rates remain below the 3% mark, setting the table for second-home buyers to lock into rates that sit at all-time lows. However, continued demand for homes in general
“There is a general migration pattern toward southern, southwestern and mountain states,” said Chris Stroud, HouseCanary Co-Founder and Chief of Research. “While these themes were present before COVID-19 hit the U.S. in spring 2020, they have significantly accelerated as the pandemic has altered the way many Americans work and live.”
HouseCanary recently found that regionally, some metros have seen more intense surges than others, as the median home price in Boise, Idaho, for example, jumped nearly 13% in the first half of 2021, from $410,100 in December 2020 to $463,383 in June, a nationwide high.
"Demand for second-homes remains well above pre-pandemic levels, and we can expect the high level of interest in vacation homes to persist in the new era of remote work," said Taylor Marr, Lead Economist at Redfin. "Builders have responded to this increased interest by putting more resources into building homes and less into hotels and lodging. If you build it—amid a historic housing shortage—they will come. I expect vacation homes to remain popular as more homes are built."
As vaccinations have become more prevalent and more return to the office, the need for hybrid work situations has waned. The National Association of Realtors’ (NAR) 2021 Vacation Home Counties Report, found a spike in the vacation home market from the second half of 2020 and through April 2021.
That same Report found that in 2020, the share of vacation home sales to total existing-home sales increased to 5.5% (5% in 2019). Vacation home sales rose by 16.4%, outpacing the overall growth in existing-home sales of 5.6%. From January to April 2021, the share of vacation home sales to total existing-home sales rose to 6.7%. Vacation home sales jumped 57.2% year-over-year compared to the 20% year-over-year growth in total existing-home sales.
NAR found the top 10 counties for vacation homes were:
- Lee County, Florida
- Oscoda County, Michigan
- Swain County, North Carolina
- Collier County, Florida
- Dukes County, Massachusetts
- Alleghany County, North Carolina
- Garrett County, Maryland
- Barnstable County, Massachusetts
- Alcona County, Michigan
- Macon County, North Carolina
Click here for more information on Redfin’s second homes report.