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While working remotely from a vacation home remains an option for many Americans, demand for those homes is slipping, reports online real estate brokerage company Redfin.
“The pandemic-driven surge in sales of vacation homes is coming to an end as mortgage rates rise at their fastest pace in history, causing second-home buyers to back off,” said Redfin Deputy Chief Economist Taylor Marr. “When rates and prices shoot up so much that a vacation home starts to look more like a burden than a good investment and a fun place to bring your family on the weekends, a lot of prospective buyers have second thoughts.”
Interest rates are about 5% on a 30-year fixed mortgage.
Redfin also reports that higher fees for second homes increased from 1% to 4% on April 1, adding about $13,500 to the cost of a vacation home that’s priced at $400,000.
Redfin says demand for vacation homes is up 13% from pre-pandemic days but is declining after the second-home boom last year. The company expects demand for second homes to remain above pre-pandemic levels for the foreseeable future because working remotely remains an option for many Americans.