Primary home stock gets a boost as demand for second homes drops
Primary home stock gets a boost as demand for second homes drops
It’s mid-May, summer vacation is on the horizon, and many wealthier Americans will soon migrate to their second homes near beaches, lakes and mountains. And while that may be the dream for a lot of folks out there, the market for second homes has hit a bit of a slump.
Redfin found that in 2023, demand for mortgages for vacation homes fell 40%, and there are signs things haven’t exactly picked up in 2024. So what is happening with the market for second homes, and has this decreased interest in vacation homes brought any relief to regular homebuyers?
Low interest rates and the pandemic lockdown in 2020 and 2021 caused a flurry of second home purchases. Ali Wolf with real estate data firm Zonda said some primary homebuyers were priced out of their local markets.
“Because oftentimes you’ll find that those looking to purchase a second home are looking to buy one in an area that is maybe traditionally more affordable, maybe a bit more seasonal,” Wolf said.
Many people who could afford to buy a home — or a second home — did just that, said Daryl Fairweather, chief economist at Redfin, but “with mortgage rates being higher now, that demand has significantly fallen.”
In Austin, Texas, mortgages for second homes decreased 63% in 2023. Austin Board of Realtors economist Clare Knapp said it’s relieved some pressure on that housing market, which has seen much interest from folks moving to Texas.
“As we’ve had a little bit less demand from the second homebuyers, you know, it’s trickled into the primary home market in the sense that there’s just more inventory on the market for those buyers,” Knapp said.
In Orlando, Florida, real estate agent Rose Kemp said she’s seen renewed interest in second homes since sales dropped in 2023. She just sold one to a Wisconsin couple who plan to move to Orlando in a few years to be close to Disney World.
“Great couple. Real fun couple. And they decided they wanted to move forward and buy ASAP because what they feel is that the values are continuing to climb,” said Kemp.
And in another hot market, Las Vegas, real estate agent Merri Perry said homes there continue to be in short supply as out-of-staters move in. This includes second homebuyers but also “empty nesters getting smaller homes. People that are having families getting bigger homes, and yes, lots of first-time homebuyers and veterans.”
She said this year, sales are rebounding despite higher interest rates and home prices.
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