Remote work and low-interest rates continue to push U.S. home buyers toward vacation homes.
Demand for secondary residences increased 77% in December compared to pre-pandemic levels, according to a report Thursday from Redfin.
“The wealthy are still flush with cash and have access to cheap debt, which is why second-home purchases remain far above pre-pandemic levels,” Daryl Fairweather, Redfin’s chief economist, said in the report.
Interest has been increasing after hitting a low in August, although December marked a slight decline from the previous month, when demand was up 80%, the data showed. The record was set in January 2021, when demand rose 92% over pre-pandemic levels.
Last month’s slowdown is attributable to the holiday season, and does not necessarily mean demand is dwindling, according to the report. On the contrary, Ms. Fairweather predicted demand for vacation properties will be strong in 2022.
“While interest in second homes is stabilizing after the big boom in the second half of 2020 and the beginning of 2021, I expect demand to remain high well into this year,” she continued. “Remote work isn’t going anywhere and mortgage rates are still quite low.”
Redfin analyzed seasonally adjusted mortgage-rate lock data from real estate analytics firm Optimal Blue for the report. A mortgage-rate lock is an agreement between a lender and a buyer that freezes an interest rate for a specified amount of time. Home buyers specify if they are looking to finance a primary home, a second home or an investment property, and about 80% of mortgage-rate locks result in a home purchase.
The report did not break down demand by region.