You know it’s a difficult time when people can’t afford vacation homes. It’s simple really: Home prices are high, mortgage rates are high, and it doesn’t seem to make much sense to buy another house, even if it’s in a ski resort or beach town.
Interest in second homes is near an eight-year low, according to Redfin; it fell to a six-year low last year. Existing homeowners in the country took out almost 91,000 mortgages for second homes last year—that’s down 40% from the prior year and down 65% from the height of the pandemic-fueled housing boom, Redfin’s data journalist wrote yesterday in an analysis.
For one, not only are all homes costly at the moment, but second homes are more expensive. The typical second home was valued at $475,000 last year compared to $375,000 for primary homes, according to Redfin. More and more people are headed back to the office too, which means vacation homes aren’t as attractive as they once were when in the midst of the pandemic people were going stir-crazy. The rental market has also cooled, so renting out a second home isn’t as lucrative, Redfin pointed out.
“Soaring prices pushed down demand for vacation homes last year, both for cash buyers and those getting a mortgage–but the latter pulled back even more because high rates exacerbated high prices,” a Phoenix-based Redfin agent said. “There has been a small uptick in interest in second homes this year, mostly from cash buyers who plan to eventually move in full time. People who would need a mortgage are still sitting on the sidelines, waiting for rates to come down–especially because rates are typically even higher for second homes than primary homes.”
Close to 3% of all mortgages went to those purchasing second homes last year. In 2020, that figure was slightly higher than 5%. And still, demand for vacation homes hasn’t taken off so far this year, according to Redfin. However, the people who did buy vacation homes last year were “affluent, white, Gen X” (that might surprise you, if you expected it to be baby boomers).
“The vast majority of people who took out mortgages for vacation homes in 2023 were–unsurprisingly–high earners,” Anderson wrote. “Nearly nine in 10 (86%) second-home mortgages issued last year went to high-income buyers.”
Almost four in five people with second home mortgages were white, and many were Gen Xers; no other generation topped Gen Xers and their vacation home ownership. As…
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