Remote Work Fuels Record Demand For Second Homes
The number of buyers who locked in mortgage rates for second homes skyrocketed 128% year-over-year in March 2021, according to a report from Redfin. The report revealed that this notches the 10th straight month of 80%-plus annual growth in the second home market. Redfin notes that the numbers should be taken in context as the market for second homes was heavily impacted by the start of the COVID-19 pandemic in March of 2020.
Even as many Americans are returning to the office, affluent remote workers are opting to spend at least part of their time in vacation destinations, according to the report. Redfin also revealed that the annual rise in demand for second homes is nearly quadruple the 34% year-over-year gain for primary homes.
"The Palm Springs housing market is incredibly busy, with an influx of vacation-home buyers from Los Angeles and San Francisco," said local Redfin agent Nisa Sheikh. "Many of them are tech workers who can do their jobs remotely, and they enjoy the weather and lifestyle here in the desert. People don't want to vacation in a hotel room right now, and many of my buyers are planning to turn their second homes into Airbnb rentals and earn some extra income when they're not in town."
The company reports that these statistics are likely due to an uneven financial recovery taking place in the U.S. Wealthy Americans likely held on to their jobs, have the ability to work remotely and benefitted from earnings through a robust stock market and rising real-estate values. Meanwhile, folks in lower-income brackets are more likely to work in industries like restaurants, retail and hospitality that are still far from recovered.
"This recession has driven wealthy and low-income Americans further and further apart, and the soaring demand for vacation homes during the pandemic is a perfect example of their unequal financial footing, with some people buying second homes and others unable to buy their first," said Redfin chief economist Daryl Fairweather. "Home prices just keep going up. That's a good thing for Americans who already own one home because they can take advantage of their increased equity to buy other assets, which in some cases includes another home. But it's bad for lower- and middle-class families, particularly those who are renters, because the barrier to homeownership is getting higher and higher."
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