Demand For Second Homes Rebounds In September – NMP Skip to main content

Demand For Second Homes Rebounds In September

Katie Jensen
Oct 20, 2021

In September, demand for second homes was 60% higher than it was before the coronavirus pandemic.

KEY TAKEAWAYS
  • In September, demand for second homes was 60% higher than it was before the coronavirus pandemic.
  • Demand for vacation homes skyrocketed as more people left the city behind to work remotely.
  • Last March, GSEs announced plans to limit the number of second home and investment property loans it would buy.
  • Last month, the Treasury Department and the FHFA announced they would move these restrictions in an effort to boost housing supply.

In September, demand for second homes was 60% higher than it was before the coronavirus pandemic, according to a new report from Redfin. Real estate analytics firm Optimal Blue provided the mortgage-rate lock data for Redfin’s analysis. 

A mortgage-rate lock is an agreement between the homebuyer and lender that allows the homebuyer to lock in an interest rate on their mortgage for a certain period of time, offering protection from future interest rate hikes. Homeowners are required to specify whether this rate lock is for a primary home, a second home, or an investment property. About 80% of mortgage-rate locks result in actual home purchases. 

During the onset of the pandemic, hoards of wealthy Americans decided to get the heck out of dodge and leave the crowded cities behind. Demand for vacation homes skyrocketed as even more people transitioned to remote work. This triggered a period of wide-spread reshuffling, and people began to migrate all across the country in search for a more satisfactory home and lifestyle. But as more cities lifted their stay-at-home restrictions, the surge in demand for second homes began to dwindle. The initial shock of the pandemic faded, the spring homebuying frenzy winded down, and the overall housing market began to cool.

However, this cooldown is not entirely due to natural market fluctuations. A new rule from Fannie Mae also contributed to the slowdown of vacation-home demand, according to Redfin deputy chief economist Taylor Marr. The government-sponsored enterprises (GSEs) announced plans last March to limit the number of second home and investment property loans it would buy. This effectively made it more challenging and expensive to get a loan for vacation homes. 

“The market may have overreacted to the Fannie Mae rule a bit, which would explain why we've been seeing demand for second homes bounce back,” Marr said. “Mortgage rates are on the rise as well, which is likely creating a renewed sense of urgency for vacation-home buyers who want to purchase properties before rates climb even further.”

Last month, the Treasury Department and the FHFA announced they would move these restrictions in an effort to boost housing supply. Marr predicts that this will likely keep demand for second homes above pre-pandemic levels for the foreseeable future. 

Furthermore, permanent remote work policies could fuel sustained interest in second homes. Earlier this month Amazon Inc. announced that it will allow many employees to work from home indefinitely, and Microsoft Corp. recently made a similar announcement.

Published
Oct 20, 2021
New Appraisal Market Research Analyzes COVID-19 Impact

Newly added research to ResearchAndMarkets.com's offering, will provide an analysis of the U.S. appraisal market.

Analysis and Data
Dec 03, 2021
For-Sale Home Inventory Hits New All-Time Low

Throughout the month of November, active listings fell 23% from 2020 and 42% from 2019.

Analysis and Data
Dec 03, 2021
Lending Activity Slows And Unusual Patterns Emerge

The latest trends have reversed patterns seen in early 2019 through early 2021 when lending activity tripled.

Analysis and Data
Dec 02, 2021
Refis Fade Out As Purchase Activity Increases

Mortgage applications fell 7.2% from last week, according to the MBA Weekly Mortgage Applications Survey.

Analysis and Data
Dec 01, 2021
2022 Offers Mixed Bag Of Challenges And Opportunities For Home Buyers

Americans may have a better chance buying a home in 2022 as more sellers hit the market, but they should still expect fierce competition.

Analysis and Data
Dec 01, 2021
IMB Production And Profits Improve In The Third Quarter

Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks improved marginally this past quarter, though it wasn’t enough to surpass last year’s figures.

Analysis and Data
Nov 30, 2021