Demand for vacation homes dropped sharply in March for the second month in a row, according to Redfin. With mortgage-rate locks for second homes at their lowest level since May 2020, many are wondering if the pandemic-induced second-home blitz is finally coming to an end?
Not quite.
Demand for vacation homes was still up 13 percent from pre-pandemic levels last month, though the rate is a marked decline from much of 2021.
“The pandemic-driven surge in sales of vacation homes is coming to an end as mortgage rates rise at their fastest pace in history, causing some second-home buyers to back off,” said Redfin Deputy Chief Economist Taylor Marr. “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. The new second-home loan fees that kicked in on April 1 were also a deterrent. Plus, some buyers’ down payments–and their nerves–probably took a hit when the stock market dipped over the last few months.”
Growth in demand for primary residences outpaced second homes for the second month in a row, with mortgage-rate locks for primary homes up 34 percent from pre-pandemic levels.
At it’s peak, mortgage-rate locks for vacation homes hit 88 percent above pre-pandemic levels in March 2021.