As wealthy Americans continue to work from home, demand for second homes has soared.
The number of buyers who locked in mortgage rates for second homes spiked to 178% year over year in April, according to a report from Redfin.
This number is likely skewed because demand for second homes dropped 24% year over year this time last year due to the onset of the pandemic. However, the numbers still show that the demand has doubled from pre-pandemic numbers.
The demand for primary homes also rose about 78% year over year, but this number is likely exaggerated for the same reasons.
The rise in demand for second homes may be largely attributed to the elevated demand for vacation homes, as affluent Americans have the option to work from home and earn money from other investments, including rising home values for their first homes.
Combine this with the rich becoming richer during the pandemic and record-low mortgage rates and you have the perfect environment for wealthy Americans to purchase second homes.
Demand for second homes marked its 11th straight month of 80%-plus growth, while price growth for seasonal towns marked its 10th straight month of 10%-plus year-over-year gains.
Home prices are up in seasonal towns (where more than 30% of housing is used for seasonal or recreational purposes) by 27% year over year to $450,000 and in non-seasonal towns by 28% to $419,000. Although these numbers are also slightly skewed because lockdown orders were strongly in effect in April 2020, Redfin Realtors predict a very hot vacation rental market this summer as many people continue to work from home or use the vacation time they’ve saved up during the pandemic.