Demand for vacation home loans is shaping up to be weaker this summer than mid-2020’s record highs, according to a new analysis of mortgage rate-lock data by economists at discount brokerage Redfin.
The number of buyers who locked in mortgage rates to buy a second home fell 11.1 percent in June compared to the same month last year, Redfin said, marking the first year-over-year decline in that figure since April 2020, when most buyers and sellers pulled back from the housing market.
“With workplaces making their remote work policies permanent and employees feeling more confident making long-term decisions, many Americans are moving full time to scenic vacation towns rather than purchasing second homes,” Redfin Chief Economist Daryl Fairweather said in a statement. “That’s one reason why demand for second homes is waning while seasonal areas remain popular. My family is one example of the trend: Partly because I’m able to work remotely, my family sold our house in Seattle and moved full time to Lake Geneva, Wisconsin to be closer to family and take advantage of its relaxed lifestyle and recreational activities.”
The report’s authors attributed the decline in part to 2020’s dramatic surge in buyer interest in second homes once many wealthy Americans decided to move to more remote and relaxing locations amid the COVID-19 pandemic’s early weeks. That high level of buyer interest makes last month’s slide seem more dramatic, they wrote.
Still, the report’s authors believe the reduction is big enough to signal that demand for vacation properties is weakening.
“Demand for second homes is dropping back down to earth as many employees return to the workplace this summer,” Taylor Marr, Redfin’s lead economist, said in a statement. “That return to the office, along with soaring prices and tighter lending standards for second homes, is shifting homebuyer demand in favor of primary residences. The allure of owning a vacation home outside the city still exists – as it did even before the pandemic – but the big second-home boom we’ve seen over the last year is abating.”
Redfin based its analysis on rate-lock data from real estate analytics firm Optimal Blue.
