Mortgage-Rate Locks For Second Homes Are

52% Below Pre-Pandemic Levels

Seasonally adjusted mortgage-rate lock index: 100 = pre-pandemic levels (Jan.–Feb. 2020)

Aug 2020: 189 +89% from pre-pandemic levels less deterred by rising rates, and we hear a lot from our buyers that they don’t want to wait for perfect market conditions — they are ready to enjoy the benefits of a second home now.”

A variety of factors are causing the outsized drop in second-home demand:

• Many potential second-home buyers are priced out because it’s frequently more expensive to buy a vacation home than a primary home. The typical second home was worth $465,000 in 2022, versus $375,000 for a primary home. Additionally, the federal government increased loan fees for second homes in April 2022.

March 2023: 86.9 -13.1% from pre-pandemic levels

• Vacation-home buyers are quicker to pull back from the market than primary-home buyers because second homes aren’t a necessity.

SOURCE: Redfin analysis of Optimal Blue data 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.”

But there are still some second-home buyers out there, especially in popular vacation destinations. Redfin agent Van Welborn said some buyers are looking for vacation condos, especially in desirable neighborhoods.

“It’s mostly affluent cash buyers who don’t have to worry about high rates,” Welborn said. “They’re motivated to buy now because they think they can get a vacation home for under asking price — and in some cases, they’re right. There are fewer buyers looking to buy properties to be used as shortterm rentals, though, as they’re finding that the market is saturated.”

“Despite a national cooling in residential real estate, we’re finding that the luxury real estate market is still in a league of its own,” Pacaso CEO and Co-Founder Austin Allison told Florida Originator Magazine previously. “High-net-worth buyers are not as reliant on financing, so they might be

• Workers are returning to the office. Second homes are less attractive when there’s less time to spend in them. While working from home is more common than it was before the pandemic, the share of job openings that allow remote work has shrunk since early 2022.

March 2023: 47.8 -52.2% from pre-pandemic levels

• Buying a vacation home to rent it out is nowhere near as attractive as it was during the pandemic homebuying and investing boom. Owners of shortterm rentals on sites like Airbnb are reporting a steep decline in business. That’s because many people became vacation-rental hosts during the pandemic, which led to oversupply. Many local governments are also instituting new short-term-rental regulations, like new taxes and stricter permitting. The long-term rental market is also cooling.

• Bank accounts are shrinking as stock markets decline, so would-be buyers have less cash on hand for down payments and monthly payments.

• Many people with the means and desire to buy a second home have already done so, during the pandemic homebuying boom of 2020 and 2021.