Second Home Demand Spikes to 87% Above Pre-Pandemic Levels Driving Seasonal Markets

It has been widely reported that the demand to purchase properties has skyrocketed in the past two years, creating immense competition for inventory. It seems, however, that it is not just people seeking to move their primary residence that is creating the competition.

Early on in the pandemic-era, it became evident that the market for vacation homes would be one of the most heavily impacted arenas for real estate in the country. The increasing prevalence of remote work, lockdown priority shifts, and the bolstered economy all pushed Americans to seek a second home that they could escape to in a sunny, vacation locale. We have seen demand increase throughout the pandemic, with the demand levels again peaking last month. January 2022 saw the demand for vacation homes nationally reach a level that is 87% higher than pre-pandemic levels! This incredible rate of demand is just under the record for vacation home demand from, in the early days of the pandemic, back in September 2020 when levels reached 90% higher than pre-pandemic demand.

According to a recent Redfin report, the rate of requests for second home mortgages is rising even faster than for primary residences. Primary residence purchases are up 42% over pre-pandemic levels. With demand for both principal and vacation properties up to these inflated numbers, it is no wonder why there is so much competition in the market for buyers.

Early on in the pandemic, the record was set for vacation home demand. While demand has remained strong throughout, there was a definite slowing over the past several months. So why is it back on the rise now? Redfin Chief Deputy Economist, Taylor Marr, believes that affluent Americans are on the hunt for a vacation property now, before interest rates rise even higher. Rates have been slowly rising, currently sitting at around 3.5%. But economists report that the rate is expected to climb even higher, closer to 4%, by the end of the year. Marr believes that this recent spike in vacation property mortgage requests can be explained by this last group of buyers looking to get in before the rates climb again.

The increased demand in vacation destinations has caused seasonal areas to see even higher price increases than other markets across the country. Redfin reports that seasonal towns have seen an average of a 20% home price increase, while non-seasonal towns have seen an average of a 13% increase. This increased rate has largely been driven by the demand for vacation properties. Like the vacation home buyers across the country, now is the perfect time to purchase a vacation home for sale in the Florida Keys to lock in your mortgage rate before they go up!