Demand for vacation homes was up 77% from pre-pandemic levels in December, according to a new report from Redfin. This is slightly below the 80% increase in November and the record 92% gain in January, but up significantly from the 2021 low hit in August.
Interest in second homes started to surge in mid-2020 as affluent Americans dispatched to vacation destinations, taking advantage of low mortgage rates and remote work. The slight slowdown in mortgage-rate locks from November to December is likely an effect of the holiday season and not indicative of dampening demand.
“The wealthy are still flush with cash and have access to cheap debt, which is why second home purchases remain far above pre-pandemic levels,” said Redfin Chief Economist Daryl Fairweather. “While interest in second homes is stabilizing after the big boom in the second half of 2020 and the beginning of 2021, I expect demand to remain high well into this year. Remote work isn’t going anywhere and mortgage rates are still quite low.”
Redfin’s report is based on an analysis of mortgage-rate lock data from real estate analytics firm Optimal Blue. A mortgage-rate lock is an agreement between a homebuyer and a lender that allows the homebuyer to lock in an interest rate on a mortgage for a certain period of time, offering protection against future interest-rate hikes. Homebuyers must specify whether they are applying to secure a mortgage rate for a primary home, a second home or an investment property. Roughly 80% of mortgage-rate locks result in actual home purchases.
To view the full report, including charts and methodology, please visit here.