Homebuyers took out 86,604 mortgages for second homes in 2024, the lowest level in records dating back to 2018 and down 5 percent from a year earlier, according to a new report from Redfin.
This is according to a Redfin analysis of Home Mortgage Disclosure Act data covering purchases of second homes, primary homes and investment properties from 2018 to 2024. The term “vacation home” is used interchangeably with “second home” in Redfin’s report.
While mortgages for second homes dipped to a six-year low in 2024, the rate of decline slowed substantially from the two years prior. In 2022, second-home mortgages fell 42 percent year-over-year, and in 2023, they fell 40 percent. The big declines in 2022 and 2023 were due largely to the vacation-home boom in 2020 and 2021, which was driven by affluent Americans taking advantage of low mortgage rates and remote work to head to vacation destinations.
Second-home mortgages made up 2.6 percent of all mortgages in 2024 — the lowest share on record, according to Redfin. That’s down from 2.8 percent the year before and from a peak of 5 percent in 2020.
Demand for all home types was slow in 2024 because it was the second-least affordable year for homebuying on record, due to high home prices and mortgage rates. Demand for second homes fell more than demand for primary homes; mortgages for primary homes fell 1.4 percent year-over-year, less than half the decline in Redfin said there are several reasons mortgages for second homes are falling faster:
- Second homes are more expensive. The median value for second homes nationwide was $495,000 in 2024, compared with $385,000 for primary homes. Plus, loan fees for second homes increased in 2022.
- Vacation homes aren’t a necessity. Inflation drove up the price of nearly everything in 2024, prompting many Americans to cut back on unnecessary expenses. When housing costs skyrocket and the market cools, people back off second homes faster.
- The rental market has cooled. Purchasing a second home to rent it out is less appealing than it used to be because asking rents are no longer growing, and the short-term rental market has cooled from its peak.
- In-office work. Many workers have less time to spend in a vacation home than they did during the pandemic because employers have asked workers to return to the office.
“Most people aren’t buying vacation homes at all because mortgage rates and insurance costs – especially for waterfront homes and condos – have skyrocketed. Plus, people know they’re unlikely to earn much revenue from listing on Airbnb now that occupancy rates are down,” Fort Lauderdale-Fla.-based Redfin Premier agent Lindsay Garcia said in a release. “While some wealthy cash buyers are still purchasing second homes, they are much more likely to make a low-ball offer or request concessions than they used to be.”
In Miami, second-home mortgage originations dropped 32.2 percent year-over-year in 2024, more than any other major metro. It was followed by four other Florida metros: Orlando (-28.4 percent), Fort Lauderdale (-28 percent), West Palm Beach (-23.7 percent) and Tampa (-20.9 percent).
Demand for second homes is falling fastest in Florida because it’s less appealing for out-of-towners to own homes there than it once was, Redfin said. Housing costs there are soaring, partly due to increasing insurance, HOA and property-tax costs. Additionally, the increasing frequency and intensity of natural disasters is turning some people off from the state. And both of those factors are making some would-be second-home buyers shy away from Florida because they’re nervous home values will fall.
While vacation-home mortgages are declining in Florida, they’re still more common in West Palm Beach than anywhere else. In West Palm Beach, second-home mortgages made up 5.6 percent of all mortgages in 2024, the highest share of the metros in Redfin’s analysis, followed by New Brunswick, N.J. (4.2 percent) and Riverside (Palm Springs), Calif. (3.5 percent).
Mortgages for second homes fell year-over-year in 30 of the 50 most populous metros, stayed flat in two, and rose in the others. They increased most in Detroit (up 26 percent year-over-year), San Francisco (17 percent) and San Jose, Calif. (15.9 percent). But second-home mortgages still made up a very small portion of all mortgages in those metros: Less than 1 percent in Detroit and San Jose, and 1.7 percent in San Francisco.