Vacation home hunters are poised to face less competition this spring buying season as the number of locks on second homes dwindles.
According to a new report from Redfin, the number of people locking in mortgages for second homes remained close to a 7-year low in March. Locks for these buyers are down by 52% from February 2020, before the pandemic housing boom, and 49% YOY.
In comparison, primary loan locks are only down 13% from pre-pandemic levels, and 29% YOY.
Locks for second homes peaked at 89% in August 2020 as wealthy Americans took advantage of historically low rates and remote work opportunities.
Now, second-home buyers are deterred by high costs and lifestyle changes. Remote work is gradually fading away, tying some wealthy Americans back to their primary homes.
“With housing payments near their all-time high; a lot of people can’t afford to buy one home right now, let alone a second,” said Redfin Deputy Chief Economist Taylor Marr.
“Add the recent increase in loan fees, inflation, shaky financial markets, the end of pandemic-related financial stimulus, and many companies calling workers back to the office, and it’s simply a challenging time for most Americans to buy a vacation home.”
Vacation homes, which are typically nearly $100,000 more expensive than others, are now even pricier thanks to a federal loan fee increase last April.
Declining demand for short-term rentals also contributed to the decline as investment properties become more expensive than what they make on Airbnb and similar sites. The long-term rental market is also finally beginning to cool.
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