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A new analysis of mortgage data from combined brokerage and listings portal Redfin says that demand for vacation homes has fallen precipitously from 2022 to 2023.
The company’s data scientists crunched data reported by lenders under the federal Home Mortgage Disclosure Act to find that Americans took out 40 percent fewer mortgages on second homes last year compared to the year before, and 65 percent fewer than the peak of the pandemic vacation home-buying craze in 2021.
U.S. homebuyers took out 90,772 mortgages for second homes in 2023, Redfin said.
Among top Sun Belt retirement destinations like Florida and Arizona, numbers of mortgages issued for second homes last year were off between 36 percent and 50 percent, depending on the metro area.
The study did not include Cape Cod and the Islands or the Berkshires, Massachusetts’ two biggest vacation home destinations, or any Maine, New Hampshire or Vermont areas.
In addition, Redfin’s data scientists analyzed mortgage rate-lock information – essentially a measure of buyers getting pre-approved for a loan – from real estate data firm Optimal Blue and found that mortgage rate-locks for second-home loans were down 7.3 percent last month on a year-over-year basis, compared to a mere 1.3 percent drop for primary-home loans.
Redfin analysts attribute the decline to the rising cost of vacation homes, which are going up alongside the prices for regular primary homes, a 2022 increase in loan fees for second homes, increasing economic worries causing some buyers to skip on purchasing a second home, the return of in-office mandates at many white-collar companies and a cooling in the market for short-term rentals in many vacation destinations, which would deter buyers who primarily intend to use their second homes as a source of rental income.
According to the Cape Cod & Islands Association of Realtors, the inventory of single-family homes for sale in Barnstable County in April was up 15.7 percent year-over-year, and the number of new listings on the market was up 20.3 percent, sending the number of months of available supply up to 2.2, from 1.7 in April 2023.
