Demand for vacation homes fall below pre-pandemic levels

“Skyrocketing monthly payments, along with higher loan fees, have priced many second-home buyers out of the market,” said Taylor Marr, deputy chief economist at Redfin. “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 fall in demand for vacation homes marks drastic change from the latter half of 2020 and 2021, when mortgage-rate locks for second homes peaked due to record-low mortgage rates and the flexibility to work remotely, said Redfin. Demand was at its highest in March 2021, when it was around 90% over pre-pandemic levels. 

According to Redfin, interest in vacation homes began to sharply decline in February of this year, around the same time mortgage rates began to climb. In the week ending June 23, the average 30-year fixed mortgage rate reached 5.81%.