Redfin Reports Demand For Vacation Homes Is Now Below Pre-Pandemic Levels
June 24 2022 - 8:00AM
Business Wire
High home prices and mortgage rates, along with
economic uncertainty and an increase in second-home loan fees, have
put an end to the pandemic-driven vacation-home boom
(NASDAQ: RDFN) — Demand for vacation homes has fallen below the
pre-pandemic baseline for the first time in two years, with
mortgage-rate locks for second homes down 4% from before the
pandemic in May, according to a new report from Redfin
(www.redfin.com), the technology-powered real estate brokerage.
That’s down from a revised rate of 3% above pre-pandemic levels a
month earlier, and 70% above pre-pandemic levels a year
earlier.
Demand for second homes is declining due to high home prices,
mortgage rates that have rapidly risen to nearly 6% and a slumping
stock market–factors that are also cooling the rest of the housing
market. Another deterrent to second-home buyers is the fact that
the federal government increased loan fees for second homes in
April, adding roughly $13,500 to the cost of purchasing a $400,000
home.
“Skyrocketing monthly payments, along with higher loan fees,
have priced many second-home buyers out of the market,” said Redfin
Deputy Chief Economist Taylor Marr. “Many would-be second-home
buyers are also deterred by turmoil in the stock markets, high
inflation and recession fears, and they can be quicker to pull back
from the market because vacation homes aren’t a necessity the way
primary homes are. The cooldown in the second-home market is likely
to continue as long as mortgage rates are elevated and the stock
market is slumping.”
The drop in vacation-home demand marks a drastic change from the
second half of 2020 and 2021, when mortgage-rate locks for second
homes skyrocketed due to record-low mortgage rates and the
flexibility to work from anywhere thanks to remote work. Demand
peaked in March 2021, when it was about 90% above pre-pandemic
levels.
Interest in vacation homes started declining sharply in February
as mortgage rates began their ascent. The average 30-year fixed
mortgage rate reached 5.81% in the week ending June 23.
To read the full report, including charts and methodology,
please visit:
https://www.redfin.com/news/second-home-demand-falls-may-2022.
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
instant home-buying (iBuying), rentals, lending, title insurance,
and renovations services. We sell homes for more money and charge
half the fee. We also run the country's #1 real-estate brokerage
site. Our home-buying customers see homes first with on-demand
tours, and our lending and title services help them close quickly.
Customers selling a home can take an instant cash offer from Redfin
or have our renovations crew fix up their home to sell for top
dollar. Our rentals business empowers millions nationwide to find
apartments and houses for rent. Since launching in 2006, we've
saved customers more than $1 billion in commissions. We serve more
than 100 markets across the U.S. and Canada and employ over 6,000
people.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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version on businesswire.com: https://www.businesswire.com/news/home/20220624005058/en/
Redfin Journalist Services: Ally Braun, 206-588-6863
press@redfin.com
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