Buying a second home? You’re not the only one — at least according to the latest figures from Redfin.
Evaluating mortgage-rate lock data from analytics firm Optimal Blue, Redfin found that the number of buyers who locked in mortgage rates for second homes skyrocketed 178% year over year in April. That’s the 11th straight month of annual growth at more than 80%.
Granted, April’s headline jump is a number that needs to be taken in context, considering that demand for second homes sank 24% last April after COVID-19 first took root in the United States. Still, second-home mortgage locks are looking strong nonetheless, holding steady at more than double pre-pandemic levels, Redfin reported.
“The combination of the wealthy becoming wealthier, remote work turning into the new normal and low mortgage rates is creating an ideal environment for affluent Americans to buy vacation homes,” said Daryl Fairweather, Redfin’s chief economist. “As long as the economy continues to grow, I don’t foresee demand for second homes slowing down anytime soon.”
The year-over-year rise in rate locks for second homes is more than twice the increase for primary homes, with the number of buyers locking in rates for primary residences up 78% in April.
Demand for second homes in vacation destinations remains high, with many upper- and upper-middle class workers, especially in tech-based jobs, able to work remotely and carrying extra funds thanks partly to rising home values. Others are seeing an opportunity to invest in a property that could turn a profit in the near-future, according to Redfin agent Lisa C. Smith, who works in Myrtle Beach, South Carolina.
“The vacation rental market is predicted to be especially hot this summer because most people are still able to work remotely, and others are using vacation time they saved up at the height of the pandemic,” she said. “A lot of investors are noticing the intensity of the rental market here and snapping up homes and condos for short-term rentals. They feel property is still affordable and taxes are cheaper in this area than other parts of the country.
“There are new listings hitting the market every day because homeowners are realizing now is a great time to sell their vacation properties. Sellers have seen prices go up, and many of them are able to sell and pocket the equity.”
Indeed, home prices in seasonal towns continue to rise at an impressive clip. Prices in such areas reached $450,000 in April, up 27% annually; the month marked the 10th straight that prices grew more than 10% year over year.