Demand for Second Homes Is More Than Double Pre-Pandemic Levels

Rhea-AI Summary

Redfin (RDFN) reported a significant 178% year-over-year increase in buyers locking in mortgage rates for second homes in April, continuing an 11-month trend of over 80% growth. This rise follows a 24% decline in demand last April due to the pandemic. Additionally, primary home mortgage rate locks increased by 78%. The surge is attributed to remote work flexibility and affluent Americans seeking vacation homes, with home prices in seasonal towns jumping 27% to $450,000. Chief Economist Daryl Fairweather anticipates continued demand for second homes amid economic growth.

Positive

• 178% increase in second home mortgage rate locks year-over-year.
• Primary home mortgage rate locks rose 78% year-over-year.
• Home prices in seasonal towns increased by 27% to $450,000.

Negative

• Demand for second homes is compared to a low base from last year due to the pandemic.
• The elevated demand highlights economic inequality in home ownership.

SEATTLE, May 10, 2021 /PRNewswire/ -- (NASDAQ: RDFN) — The number of buyers who locked in mortgage rates for second homes soared 178% year over year in April, marking the 11th straight month of 80%-plus growth, per a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. The record increase should be taken in context: It is likely exaggerated because demand for second homes dropped 24% year over year last April, the month after the coronavirus pandemic hit the U.S. and real estate activity in the country nearly ground to a halt. Still, second-home mortgage rate locks are holding steady at more than double pre-pandemic levels. 

The rise in demand for second homes is more than twice the increase for primary homes, with the number of buyers who locked in mortgage rates for primary homes rising 78% year over year in April. That's a record jump, too, but should also be taken in context, as demand for primary homes dropped last April due to the pandemic.

The data in Redfin's report is based on the company's analysis of mortgage-rate lock data from real estate analytics firm Optimal Blue. Demand for vacation homes remains elevated as wealthy Americans continue to have the freedom to work remotely and earn money from robust stock portfolios and rising home values. Even as some offices start to reopen, many Americans plan to work remotely for the long term, at least part of the time. 

"The combination of the wealthy becoming wealthier, remote work turning into the new normal and low mortgage rates is creating an ideal environment for affluent Americans to buy vacation homes," said Redfin Chief Economist Daryl Fairweather. "As long as the economy continues to grow, I don't foresee demand for second homes slowing down anytime soon."

The elevated demand for second homes in the pandemic era is one sign of economic inequality in the U.S., with some buyers able to afford second homes and others unable to become homeowners at all. 

Home prices are up 27% year over year in seasonal towns 

Home prices in seasonal towns, where second homes are often located, rose 27% year over year in April to $450,000. Prices in non-seasonal towns are up by a similar margin: 28% to $419,000. Though those jumps are both the biggest on record, the increases are somewhat inflated because price growth was slow at this time last year due to stay-home orders and economic lockdowns related to the pandemic. Non-seasonal price growth is slightly bigger than seasonal price growth this month partly because prices in non-seasonal towns dropped more significantly at this time last year. 

Price growth for homes in seasonal towns started recovering last summer, and April marks the 10th straight month of 10%-plus year-over-year growth. 

To read the full report, including charts with metro-level data, please visit: https://www.redfin.com/news/second-home-demand-doubles 

About Redfin
Redfin (www.redfin.com) is a technology-powered real estate broker, instant home-buyer (iBuyer), lender, title insurer, and renovations company. 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. Since launching in 2006, we've saved customers nearly $1 billion in commissions. We serve more than 95 markets across the U.S. and Canada and employ over 4,100 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 does the recent Redfin report say about second home mortgage rates for RDFN in April 2021?

The Redfin report reveals a 178% year-over-year increase in second home mortgage rate locks for April 2021.

How did primary home mortgage rates change according to the April 2021 Redfin report?

Primary home mortgage rate locks increased by 78% year-over-year in April 2021.

What are the average home prices in seasonal towns as per the April 2021 Redfin report?

Home prices in seasonal towns rose by 27% year over year to $450,000 according to the April 2021 Redfin report.

What factors are driving the demand for second homes according to the Redfin press release?

Demand for second homes is driven by remote work flexibility and increased wealth among affluent Americans.

How does the increase in second home demand reflect economic trends according to Redfin?

The increase in second home demand highlights economic inequality, with some buyers able to afford second homes while others struggle with home ownership.