{"id":76776,"date":"2023-09-14T05:30:26","date_gmt":"2023-09-14T12:30:26","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=76776"},"modified":"2023-09-13T14:56:50","modified_gmt":"2023-09-13T21:56:50","slug":"vacation-home-demand-drops-august-2023","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/vacation-home-demand-drops-august-2023\/","title":{"rendered":"Demand for Vacation Homes Sits Near 7-Year Low Due to High Housing Costs, Return-to-Office Mandates"},"content":{"rendered":"

Mortgage rate locks for second homes are down nearly 50% from pre-pandemic levels, compared to a 33% drop for primary homes.\u00a0<\/span><\/i><\/p>\n

Mortgage-rate locks for second homes were down 47% from pre-pandemic levels on a seasonally adjusted basis in August, compared to a 33% decline for primary homes. August marks the 14th-straight month that second-home demand has hovered at least 30% below pre-pandemic levels, as high housing costs and limited inventory deter would-be buyers. Rate locks for second homes hit a seven-year low in February, dropping to 52% below pre-pandemic levels.\u00a0<\/span><\/p>\n

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That\u2019s according to a Redfin analysis of <\/span>Optimal Blue<\/span><\/a> data. A mortgage-rate lock is an agreement between a homebuyer and a lender that allows the homebuyer to lock in an interest rate on a mortgage for a certain period of time; roughly 80% of rate locks result in purchases. See the end of this report for more details on methodology.\u00a0<\/span><\/p>\n

Demand for second homes is also down from a year ago. Mortgage-rate locks for second homes is down 19% year over year, bigger than the 14% decline for primary homes.\u00a0\u00a0<\/span><\/p>\n

The plunge in mortgage locks for vacation homes comes after they skyrocketed during the pandemic, hitting a peak of 88.5% above pre-pandemic levels in October 2020. Affluent Americans jumped at the chance to snap up second homes with record-low mortgage rates during a time when many of them could work remotely from vacation towns. Demand for primary homes jumped during that time, too, but the increase was much more modest, reaching a peak of 16% above pre-pandemic levels in late 2020.\u00a0<\/span><\/p>\n

High prices and loan fees, plus diminishing appeal of rental properties, deter second-home buyers<\/h3>\n

Mortgage rates rose to a <\/span>two-decade high<\/span><\/a> in August, keeping demand low for both primary homes and second homes. Still-high home prices, the elevated cost of other goods and services, the uncertain economy, and a lack of new listings are also holding back buyers of both home types.\u00a0<\/span><\/p>\n

But the drop in demand for vacation homes is bigger, due to a variety of factors:<\/span><\/p>\n