Second-Home Demand Jumps in September, Bouncing Back After Summer Slowdown

Rhea-AI Summary

In September, the demand for second homes surged by 60% compared to pre-pandemic levels, as reported by Redfin. This analysis, based on mortgage-rate lock data, indicates a rebound in interest for vacation homes after a summer slowdown. Despite a temporary decline due to Fannie Mae's new mortgage rules, renewed urgency among buyers is anticipated as interest rates rise. The removal of these restrictions by the Treasury and the Federal Housing Finance Agency is expected to sustain demand for second homes. Ongoing remote work policies by companies like Amazon and Microsoft may further contribute to this trend.

Positive

• Demand for second homes increased by 60% compared to pre-pandemic levels.
• Renewed urgency among buyers due to rising mortgage rates.
• Removal of Fannie Mae's restrictions likely to sustain demand for second homes.
• Ongoing remote work policies by major companies may fuel continued interest in vacation homes.

Negative

• Initial surge in vacation home demand slowed due to easing of pandemic restrictions.
• Fannie Mae's mortgage rules made it harder for some buyers to secure loans for second homes.

SEATTLE, Oct. 20, 2021 /PRNewswire/ -- (NASDAQ: RDFN) — In September, demand for second homes was 60% higher than it was before the coronavirus pandemic hit, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

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.

The popularity of vacation homes skyrocketed at the onset of the coronavirus pandemic, with many well-off Americans opting to leave city-life behind and work remotely. But the surge in demand for second homes started to slow as cities lifted stay-at-home restrictions, the initial shock of the pandemic faded, spring homebuying season ended and the overall housing market began to cool.

A new rule from Fannie Mae probably also contributed to the slowdown in vacation-home demand, according to Redfin Deputy Chief Economist Taylor Marr. The government sponsored mortgage enterprise announced plans in March to limit the number of second-home and investment-property loans it would buy, effectively making it more challenging and expensive for some buyers to take out mortgages on vacation homes.

"The market may have overreacted to the Fannie Mae rule a bit, which would explain why we've been seeing demand for second homes bounce back," Marr said. "Mortgage rates are on the rise as well, which is likely creating a renewed sense of urgency for vacation-home buyers who want to purchase properties before rates climb even further."

In the middle of last month, the Treasury Department and Federal Housing Finance Agency announced that they would remove the aforementioned restrictions on Fannie Mae in an effort to boost housing supply. This will likely help keep demand for second homes above pre-pandemic levels for the foreseeable future, Marr said.

Permanent remote work policies may also fuel sustained interest in second homes. Earlier this month, Amazon.com Inc. said it will allow many employees to work from home indefinitely. Microsoft Corp. recently made a similar announcement.

To view the full report, including charts and methodology, please visit:

https://www.redfin.com/news/vacation-homes-september-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 was the increase in demand for second homes in September 2021 according to RDFN?

Demand for second homes jumped by 60% in September 2021 compared to pre-pandemic levels.

How did Fannie Mae's new rule affect second home demand in 2021?

Fannie Mae's rule limited loans for second homes, temporarily slowing demand.

What factors are contributing to the resurgence of second home interest?

Rising mortgage rates and the removal of restrictions by the Treasury are boosting interest.

Which companies announced indefinite remote work policies that may impact second home demand?

Amazon and Microsoft announced remote work policies, increasing interest in vacation homes.