Luxury Real Estate Insiders Say 2nd Home Demand Down 50% As Wealthy Investors Pull Back from Investing In Real Estate
Luxury real estate insiders say mortgages secured for vacation properties are at their lowest since 2016.
Insiders say the second home market is definitely in a recession. Redfin is reporting lock-ins for second-home mortgages are down 52.2% in March from pre-pandemic levels.
Mortgage rate locks for vacation homes dropped to their lowest level since 2016 in February. If that wasn’t bad enough news, the numbers were worse for the month of March.
However, mortgage rate locks for primary homes dropped only 13.1% in March from pre-pandemic levels.
Luxury Real Estate Insiders Say Several Factors Are At Play
Several factors are contributing to this low demand. The main factors are high mortgage interest rates and elevated listing prices. Vacation homes are typically more expensive than primary residences.
Moreover, the federal government enacted higher loan fees for second homes in April 2022. This initiated the first major decrease in second-home interest since March 2020.
Compounding the problem is that housing payments are near their all-time high. Most buyers can’t afford to buy one home right now. As a result, they are hard pressed be ab able to buy a second home.
Additionally, the report says workers returning to the office is resulting in less desire to own a second home. Fewer buyers can use their secondary property as a remote office space. Additionally, a slowdown in both the short and long-term rental markets created an oversaturated market. This has diminished the opportunities for property owners to rent these homes out.
However, all of this could be good news for cash buyers seeking second homes, as competition is down and there’s no worry about high mortgage rates.
The only investors buying properties are affluent cash buyers who don’t have to worry about high rates. They’re motivated to buy now because they think they can get a vacation home for under asking price and in some cases, they’re right.
Write A Comment