Vacation Home Demand Remains Strong

Demand for both primary homes and vacation homes has continued to rise since the start of the pandemic, but demand growth for vacation homes is surpassing primary ones.

In January 2022, homebuyer demand for second homes rose 87% from pre-pandemic levels, according to a recent report from Redfin. The highest level was 90% in September 2020, showing that while demand has fluctuated slightly, it has remained mostly stable for the past nearly two years. Demand for primary homes also saw an increase, up 42% from pre-pandemic levels. Pre-pandemic, demand for primary homes typically outpaced secondary homes slightly, but today, secondary home demand far surpasses primary home demand.

Prices in typical vacation towns (which are areas where at least 30% of residences are vacation homes) have also grown at a quicker rate. While housing prices have hit record highs across the U.S., the report found that home prices in vacation homes rose 20% year over year, the 18th month of consecutive double-digit price growth. In December, the average home in a vacation town sold for $501,000. For areas that are mainly primary homes, the median home price was $408,000, representing a 13% year over year growth, according to the report.

Not surprisingly, inventory is also lower in vacation towns. While inventory has remained a challenge for nearly all areas of the country, the report found that listings in vacation towns were down 29% year over year. Comparatively, in non-vacation towns, inventory was still down year over year, but only 16%.

However, as record low mortgage rates continue to rise to pre-pandemic levels, it is expected that demand will decrease slightly.