By September Sees New Upturn In Demand For Second Homes
More buyers were seriously considering a second-home purchase last month, and locked in mortgage rates to prepare for the transaction.
Demand for second homes accelerated again as summer crept toward fall, remaining below its peak earlier in the pandemic but well above historic levels.
The demand for vacation properties and second homes in September was 60 percent higher than its pre-pandemic levels, according to an analysis from Redfin. The previous month, demand was 40 percent higher than it had been before the pandemic.
“The popularity of vacation homes skyrocketed at the onset of the coronavirus pandemic, with many well-off Americans opting to leave city-life behind and work remotely,” Redfin’s report reads.
Second-home demand shot up almost immediately after the initial shock of the pandemic wore off. Interest in these second homes continued to rise in the months that followed, peaking at well over twice its usual levels in March earlier this year.
Since then, the numbers have come back down a bit, while remaining much higher than normal. Some of the second-home slowdown was likely seasonal, as the frantic spring homebuying season drew to a close, the brokerage said.
But another possible damper on demand that happened around that time was a new rule from Fannie Mae that effectively made it more difficult for borrowers to acquire loans for riskier properties, such as a second home or investment property.
Fannie Mae’s announcement came in March, which coincided with the peak of demand for these homes.
“The market may have overreacted to the Fannie Mae rule a bit, which would explain why we’ve been seeing demand for second homes bounce back,” Redfin Deputy Chief Economist Taylor Marr said in the company’s report. “Mortgage rates are on the rise as well, which is likely creating a renewed sense of urgency for vacation-home buyers who want to purchase properties before rates climb even further.”
The Seattle-based brokerage based its findings on the number of people who locked in mortgage rates for properties that they labeled as second homes. Approximately 4 in 5 rate locks result in an actual home purchase, Redfin said.
