Mortgage Apps For Vacation Homes Spike 84 Percent In January 2021 YOY

Mortgage applications for second homes skyrocketed 84% year-over-year in January, according to a report from Redfin. The jump marks the eighth straight month of 80%-plus year-over-year growth. Despite being a substantial increase the report notes that it is down from the peak 118% year-over-year increase in September 2020.

 

The increase in second-home applications year-over-year is more than twice the increase in applications for primary homes, which is based on the analysis of mortgage-rate lock data from Optimal Blue. As the COVID-19 pandemic continues to convert many companies to a remote workforce, more folks are looking to less densely packed cities and decamping to vacation destinations. Redfin also states that the increase in demand for second homes is indicative of a K-shaped economic recovery from the pandemic-driven recession.

"Although demand is down slightly from the fall peak, the fact that nearly twice as many second-home buyers submitted applications in January as the year before means the popularity of vacation towns is not a fad," said Redfin economist Taylor Marr. "Many Americans have realized remote work is here to stay, allowing some fortunate people to work from a lakefront cabin or ski condo indefinitely. But while many well-off remote workers are able to follow their dreams and purchase second homes, it has become even more difficult for many lower-income people to buy a primary residence as home values rise and the recession disproportionately impacts employees in the service sector."

Meanwhile, Redfin also reported that home prices in seasonal towns are up 19% year-over-year in December 2020. Low mortgage rates are responsible for keeping overall homebuying demand up over the past couple of months, with total home sales up 16% year-over-year as of December.

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