The demand for second/vacation homes has been shockingly strong throughout much of the pandemic, so naturally any dip in interest will attract headlines. However, according to new Redfin data, demand has now dropped to its lowest level in nearly two years.
February marked the first month since the start of the pandemic that growth in demand for primary residences outpaced that of vacation homes, with mortgage-rate locks for primary homes up 36 percent from pre-pandemic levels.
Demand for second homes was still up 35 percent from pre-pandemic levels, but that’s significantly lower than the 87 percent increase in January 2022.
“Rising mortgage rates, combined with rising home prices, are hitting the second-home market much harder than the primary-home market,” said Redfin Chief Economist Daryl Fairweather. “That’s largely because vacation homes are optional. People don’t need a second home, but they do need a place to live. Still, people are buying up vacation homes more than they were before the pandemic, as work remains more flexible than it used to be.”
According to Redfin, prices continue to grow in seasonal towns—where vacation homes are often located—some 20 percent year-over-year in February to a median of $513,000. February marks more than a year and a half of 10 percent-plus year-over-year growth for home prices in seasonal towns.
Meanwhile, home prices in non-seasonal towns were up 13 percent to $414,000 in February.