Vacation & Second Home Demand is Still Up

The lure of a second home or a vacation home surged for the affluent during the pandemic lockdowns due in part to historically low rates, reports Redfin. In March 2021, second home purchase mortgage rate locks were up 88% from those seen in the pre-pandemic levels. In March of 2021, the 30-year fixed-rate mortgage averaged just over 3% and has now risen above 5%, which has curtailed demand.

Also stifling purchases were the recent fees imposed on second home purchases by the FHFA increasing by 1% to 4%. After two months of declines, vacation home demand is still up 13% from pre-pandemic levels and it is expected to remain higher than before the shutdowns across the nation due in part to many more Americans now working permanently from home.

Redfin went on to say that growth in demand for primary residences was higher than that of second homes for two straight months in a row, with mortgage-rate locks for primary homes higher by 34% from pre-pandemic levels. Demand for primary residences is about at the same level since June 2020.

Redfin Deputy Chief Economist Taylor Marr said, “When rates and prices shoot up so much that a vacation home starts to look more like a burden than a good investment and a fun place to bring your family on the weekends, a lot of prospective buyers have second thoughts.”

Bottom line: Whether you are in the market for a primary or secondary dwelling, the American dream of owning a home is in your grasp if you are gainfully employed and the price is right.

Source: Mortgage Market Guide