Sales of vacation homes are soaring, even as millions of Americans grapple with financial devastation triggered by the coronavirus pandemic. In October, demand for second homes skyrocketed 100% from a year earlier – the fourth triple-digit increase in the last five months, according to a new report from Redfin.
The second-home demand outpaced the 50% increase in demand for primary homes.
For its report, Redfin analyzed mortgage-rate lock data from real estate analytics firm Optimal Blue. When homebuyers lock in a mortgage rate for a certain period of time, they’re assured that rate won’t change. And when applying, they must specify whether they plan to use the money for a primary home, secondary home or investment property. Of all rate locks, about 80% result in a property purchase.
Home sales are rising across the board due to record-low mortgage rates and a wave of relocations during the pandemic, but demand for second homes is particularly strong as affluent Americans work remotely, no longer need to send their kids to school in person and face travel restrictions, says lead economist Taylor Marr.
“With mortgage rates at all-time lows and offices shut down across the country, the dream of having a second home outside of the city is becoming a reality for many wealthy Americans,” Marr said. “Unfortunately, at the same time, millions of less-fortunate families are behind on their mortgage or rent payments due to financial hardship brought on by the coronavirus pandemic.”
Some of the second homes purchased this year will ultimately turn into primary homes, since it’s common for a buyer to close a deal on a second home before putting their current house on the market, Marr says.
In Florida these statistics are even stronger. While news stories are filled with doom and gloom about the pandemic, realtors are swamped with new buyer leads and swap stories about the fierce competition for buyers all summer and into the fall. It is not uncommon for listings to sell within 24 hours while breaking sales history for price per square foot in their neighborhoods.