Key Highlights
- Second home mortgages soar +178% y/y in April
- 11th consecutive month of +80%-plus growth
Jump in Demand for Second-Homes More than Twice Demand for Primary Homes
A recent study by Redfin confirmed what we’ve all “noticed,” the soaring demand for second homes over the last 11 months.
In April, the number of buyers who locked in mortgage rates for second-home purchases skyrocketed +178% y/y. Before you fall off your chair while reading that stat, remember that in April 2020, one month after the COVID pandemic demolished our sense of what’s “normal,” demand for second-homes plummeted -24% y/y.
April 2021 was the 11thconsecutive month that demand for second-home mortgages grew by 80%+.
Demand for primary-home mortgages jumped +78% y/y in April as well.
Second-Home Mortgage Rate Locks Holding Steady
Redfin’s Chief Economist Daryl Fairweather said, “The combination of the wealthy becoming wealthier, remote work turning into a new normal and low mortgage rates is creating an ideal environment for affluent Americans to buy vacation homes.”
Fairweather added, “As long as the economy continues to grow, I don’t foresee demand for second-homes slowing down anytime soon.”
Second-Home Mortgage Demand Reflects Two-Sided COVID Crisis
This Redfin second-home study mirrors the effects of the COVID pandemic.
Workers who lost their jobs during the pandemic and workers in low-paying jobs who have been able to keep working through the pandemic now lack the means to afford homeownership as home prices continue to skyrocket.
Affluent Americans who are able to work remotely from anywhere have the ability to take advantage of low mortgage rates. These consumers do have the means to both “move-up” to higher priced homes and to buy high-end homes in popular vacation destinations.
Largest Markets with Biggest Increases in Luxury-Home Sales in Q1 2021
The largest jumps in luxury-home sales in the nation’s largest markets during Q1 2021 included:
- Miami – +101.1% y/y
- San Jose – +92.3% y/y
- Oakland – +82% y/y
- Sacramento – +79.3% y/y
- Las Vegas – +72.7%
Lack of Inventory
The number of for-sale luxury homes fell -5.1% during Q1 2021. This -5.1% drop was the smallest inventory decline among the five price tiers analyzed by Redfin
The number of for-sale affordable homes dropped -14.9% while the supply of mid-priced homes slumped -19.8%.
According to Fairweather, “(Selling) isn’t as big of an issue for luxury homeowners since there’s a relative abundance of high-end home to choose from.”
Home Prices in “Seasonal” Locations
Home prices in seasonal towns, towns that offer specific seasonal activities such as snow skiing and/or water activities such as fishing and water sports, jumped +27% y/y in April to an average home price of $450,000.
Home Prices in non-seasonal towns increased similarly to 28% with an average home price of $419,000.
Thanks to Redfin and HousingWire.
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