Demand for second-home mortgages is outpacing demand for primary residences, according to new data out from Redfin. Examining residential mortgage-rate lock data, demand for second or vacation homes was up 87 percent in January the highest level in a year.
Meanwhile, demand for primary residences was up 42 percent from pre-pandemic levels in January.
“Demand for second homes was strong in January as buyers tried to lock in relatively low mortgage payments,” said Redfin Deputy Chief Economist Taylor Marr. “Mortgage rates surpassed 3.5 percent in January for the first time since March 2020, encouraging buyers who were on the fence about purchasing a vacation home to commit before rates increase further. While I expect demand for second homes to remain higher than it was before the pandemic, mostly because of remote work, it may fall slightly in the coming year as mortgage rates continue to go up and fees for second-home loans increase.”
Looking at home prices in seasonal towns, where vacation homes tend to be located, Redfin found sizable upticks when compared to non-seasonal locations.
The average home in a seasonal town sold for $501,000 in December—a 20 percent year-over-year increase, marking 18 straight months of double-digit price growth. In non-seasonal towns, the median sale price was up 13 percent year-over-year in December to $408,000.