Rate locks on mortgages for second homes, increased throughout the pandemic, peaking in Summer 2020 and again in Spring 2021. Sales of second homes fell 26.6% year-over-year this past summer, according to the Second Home Market Report from Pacaso, a company that operates a real estate platform for these homes.
“It’s estimated that there are nearly 10 million second homes in the U.S.,” said Pacaso CEO Austin Allison. “With pandemic-driven shifts that have allowed people greater flexibility around where they live and work, we expect to see this number continue to grow. The second home housing market represents a significant subset of the market that is critical to watch in order to fully understand the U.S. housing market.”
Despite this recent cooling of the pandemic-fueled second home surge, overall market share of second homes is still up from pre-pandemic levels, the company said.
From 2017 through 2019, second home transactions averaged a 3.8% quarterly market share of all rate locks. As of summer 2021, that percentage was up from pre-pandemic levels, with second homes comprising a 4.3% market share.
Across the board, second home transactions are mostly down, but prices remain highly elevated and continue to rise, the company said. Of the top 50 second home destinations analyzed, 46 saw a year-over-year decline in transaction activity in the summer months.
However, four markets stood out as exceptions:
- Kauai, Hawaii — rate locks for second homes increased 23.5%
- Summit County and Eagle County, Colorado — increased 10.2% and 9.8%, respectively
- Boise County, Idaho — increased 4.4%