22
DEMAND FOR
VACATION HOMES
RETURNS TO PRE-
PANDEMIC NORMS
Vacation homes became all the rage early
in the pandemic, with demand peaking at 90%
above normal levels in March 2021. But today,
the apparent demand for second properties or
vacation homes has fallen to "normal" levels,
or at least to the level it was at before the
pandemic, as demand is now down by 4%
compared to the first quarter of 2020.
is data comes to us by way of Redfin,
who analyzed Black Knight's Optimal Blue
data to use in this report. Compared to a year
ago, demand was still 70% above what it was
compared to the beginning of the pandemic.
e expanding interest in vacation
homes began in mid-2020, as more affluent
Americans took advantage of remote work
and low mortgage rates to escape to and invest
in vacation destinations. ough demand
remained well above pre-pandemic levels, it
declined last spring before bouncing back in the
fall. is is the third consecutive month that this
statistic has declined.
But one deterrent to second-home
buyers is the fact that the federal government
increased loan fees for second homes in April
2022, adding roughly $13,500 to the cost of
purchasing a $400,000 home.
"Skyrocketing monthly payments, along
with higher loan fees, have priced many second-
home buyers out of the market," said Taylor
Marr, Redfin's Deputy Chief Economist. "Many
would-be second-home buyers are also deterred
by turmoil in the stock markets, high inflation
and recession fears, and they can be quicker
to pull back from the market because vacation
homes aren't a necessity the way primary homes
are. e cooldown in the second-home market
is likely to continue as long as mortgage rates
are elevated and the stock market is slumping."
Journal
