Remember back in 2021 when buyers were snapping up second homes after just hours on the market? Well, those days are clearly long gone as Redfin has found that demand for second-home/vacation-home mortgages fell 40 percent last year.
In fact, demand for second-home mortgages fell twice as fast as mortgage demand for primary homes. And when compared to the height of the pandemic housing boom in 2021, demand was down 65 percent in 2023.
According to the report, home purchases fell across the board last year due to low inventory, high mortgage rates and high home prices. Mortgages for second homes, in particular, dropped more than mortgages for primary homes in part due to the higher costs associated with second homes and the cooling down of the rental market.
The Bay Area and Austin saw the biggest declines in mortgages for second homes nationally.
The share of total mortgages that went to second-home buyers also dropped last year: 2.8 percent of all mortgage originations in 2023 were for second homes, down from 3.6 percent in 2022 and 5.1 percent in 2021.