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Highland Lighthouse in Truro on Cape Cod. iStock photo
A new analysis of nationwide mortgage application data shows just how much demand for vacation homes has grown during the pandemic.
Using mortgage rate-lock data from real estate analytics firm Optimal Blue, Redfin economists estimate that mortgage applications for second homes soared 118 percent year-over-year in September, and demand for second-home mortgages has been up at least 80 percent on a year-over-year basis in every month from June 2020 to January 2021.
The data is in stark contrast to the already-intense demand for primary residences, which Redfin study found was up 65 percent in September on a year-over-year basis.
“Although demand is down slightly from the fall peak, the fact that nearly twice as many second-home buyers submitted applications in January as the year before means the popularity of vacation towns is not a fad,” Redfin economist Taylor Marr said in a statement. “Many Americans have realized remote work is here to stay, allowing some fortunate people to work from a lakefront cabin or ski condo indefinitely. But while many well-off remote workers are able to follow their dreams and purchase second homes, it has become even more difficult for many lower-income people to buy a primary residence as home values rise and the recession disproportionately impacts employees in the service sector.”
That demand showed up in 2020’s home prices. Massachusetts’ main vacation destination regions – the Berkshires, Cape Cod and the islands – saw the highest increases in median sale price and total single-family sales in 2020 according to The Warren Group, publisher of Banker & Tradesman.
Berkshire County saw its median single-family sale price increase 15.81 percent on a year-over-year basis to $249,000 in 2020 and total single-family sales jump 21.2 percent to 1,864. Barnstable County’s single-family market saw similar performance, with total sales increasing 20.55 percent to a record 5,297 and its median sale price rise 15.85 percent to $475,000.
But the biggest increases were seen on Martha’s Vineyard and Nantucket as luxury homes that would ordinarily sit on the market for months were snapped up in weeks. Dukes County’s median single-family price increased 19.89 percent to $967,500 and total single-family sales jumped 46.13 percent to 396. Nantucket County, however, saw its median single-family price and total single-family sales rise the most of any Massachusetts county – the former by 34.17 percent to $2.01 million and the latter by 71.23 percent to 250.
The biggest drivers in these and other vacation spots around the country, Redfin said? The ease of remote work, homeschooling and the increasingly evident, “K-shaped” nature of the coronavirus recession that has put many working-class American’s jobs in hotels and other service jobs in jeopardy while sparing white-collar workers and even increasing the wealth of anyone with investments in the stock market.
Redfin suggests 2021 could see continued strong demand thanks to low mortgage rates: Mortgage applications for second homes were up 84 percent nation-wide in January on a year-over-year basis, compared to 36 percent increase for first home applications.
