The number of buyers who locked in mortgage rates for second homes soared 178 percent year-over-year, according to a recent Redfin report. Redfin notes the percentage is likely inflated because demand for second homes dropped 24 percent year-over-year last April, the month after the coronavirus pandemic hit.
Even so, second-home mortgage rate locks are holding steady at more than double pre-pandemic levels, and the increase in demand for second homes is more than twice the increase for primary homes, according to the report.
“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,” Redfin Chief Economist Daryl Fairweather said in a release. “As long as the economy continues to grow, I don’t foresee demand for second homes slowing down anytime soon.”
Home prices in seasonal towns, where second homes are often located, rose 27 percent year-over-year in April to $450,000, according to the report. Prices in non-seasonal towns are up by 28 percent to $419,000.
“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,” Lisa Smith, a Redfin real estate agent in Myrtle Beach, S.C., said. “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.”