Demand for Second Homes Fell 19% Year Over Year in August

Rhea-AI Summary

Demand for second homes fell 19.3% year over year in August, continuing a three-month decline, as reported by Redfin on Sept. 22, 2021. Primary home demand also declined by 1% year over year, marking a second consecutive month of downturns. This decrease in demand follows a significant surge during the pandemic, when demand for second homes spiked by 172%. Despite the recent declines, interest in second homes remains above pre-pandemic levels, attributed to the ongoing trend of remote work.

Positive

• Demand for second homes remains above pre-pandemic levels.
• Sales of vacation homes accounted for 6.7% of overall existing-home sales in early 2021, up from 5% in 2019.

Negative

• Demand for second homes dropped 19.3% year over year in August.
• Primary home demand fell 1% year over year.

SEATTLE, Sept. 22, 2021 /PRNewswire/ -- (NASDAQ: RDFN) — Demand for second homes dropped 19.3% year over year in August, marking the third-straight month of declines, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Demand for primary homes also fell, slipping 1% year over year in the second-consecutive month of declines.

That's according to a Redfin analysis of mortgage-rate lock data from real estate analytics firm Optimal Blue. A mortgage-rate lock is an agreement between a homebuyer and a lender that allows the homebuyer to lock in an interest rate on a mortgage for a certain period of time, offering protection against future interest-rate hikes. Homebuyers must specify whether they are applying to secure a mortgage rate for a primary home, a second home or an investment property. Roughly 80% of mortgage-rate locks result in actual home purchases.

It's important to note that while demand for second homes appears to have fallen significantly further year over year than demand for primary homes, that's likely because there was a relatively large gain in demand for second homes a year ago. 

Demand for vacation homes swelled during the coronavirus pandemic—surging as much as 172% in April—as many affluent Americans sought an escape from cramped city life amid stay-at-home restrictions. But as the overall housing market has started to cool, that insatiable demand has slowed.

While interest in second homes is lower than it was a year ago, it remains above pre-pandemic levels and will likely stay elevated as a result of the permanent shift to remote work for many Americans, according to Redfin Lead Economist Taylor Marr. Sales of vacation homes made up 6.7% of overall existing-home sales in the first four months of this year, up from 5% in 2019, according to a recent report from the National Association of Realtors.

"The pandemic isn't over, but the desire to escape isn't as intense as it was before. People are increasingly returning to life as normal, with kids going back to school and cities coming to life again," said Marr. "The housing market as a whole is still booming, just not as strongly as it was in the second half of 2020. Homebuyer competition, migration and home-sales growth have all slowed."

To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/vacation-homes-august-2021/

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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SOURCE Redfin

FAQ

What is the current trend in demand for second homes as of August 2021 for RDFN?

Demand for second homes decreased by 19.3% year over year in August 2021.

How has the demand for primary homes changed in August 2021 for RDFN?

Demand for primary homes fell by 1% year over year in August 2021.

What percentage of existing home sales were vacation homes in early 2021 according to RDFN?

Vacation homes made up 6.7% of overall existing-home sales in the first four months of 2021.

When was the significant surge in second home demand observed?

A significant surge of 172% in second home demand was observed in April 2020.