In January, second-home demand was up 87% from before the pandemic, the highest levels in a year and almost up to September 2020’s record 90% gain, Redfin reported.
Second-home demand outpaced primary residence demand, which was up 42% from pre-pandemic levels.
“Demand for second homes was strong in January as buyers tried to lock in relatively low mortgage payments,” said Redfin Deputy Chief Economist Taylor Marr.
“Mortgage rates surpassed 3.5% in January for the first time since March 2020, encouraging buyers who were on the fence about purchasing a vacation home to commit before rates increase further. While I expect demand for second homes to remain higher than it was before the pandemic, mostly because of remote work, it may fall slightly in the coming year as mortgage rates continue to go up and fees for second-home loans increase.”
Demand for vacation homes has surged as affluent Americans take advantage of remote work and historically low-interest rates. Though it slowed last summer, the fall saw renewed enthusiasm.
Second homes gained popularity in “Off-Broadway” markets like Central and North Florida. Sumter County, Florida, saw a 65% year-over-year rise, the largest increase in second home rate lock transactions.
“In April of last year, people stopped to take a beat, to see how things would shake out in what everyone hoped would be a post-pandemic reality,” Austin Allison, CEO of Pacaso, said.
“For some, that also meant going back to the office, and perhaps not coincidentally, second home sales started to slow. But these last few months, many employers finally decided to make remote work more permanent. This seems to have spurred renewed interest in second homeownership.”
In seasonal towns, the average home sold for $501,000 in December, up 20% year-over-year (YOY). Home prices rose more in seasonal towns than in non-seasonal towns, where median sale price rose 13% YOY to $408,000.
Homes were also more scarce in seasonal towns, with the number of listings down 29% YOY in Q4. Non-seasonal towns saw a drop of 16% YOY.