The last 12 months has not only been big for mortgage refinances and first-time homebuyers filing mortgage applications — it was also a banner year for mortgage applications for second homes, according to a new Redfin study.
Applications for those purchasing a second home were up 84% in January, compared to the same time in 2020. That statistic has dropped from a year-over-year increase peak of 118% in September. The current rate is more than double the 36% increase in mortgage applications for primary residences.
The analysis is based on Redfin’s review of mortgage-rate lock data provided by real estate analytics firm Optimal Blue. The report notes that white-collar workers working from home are purchasing vacation homes to escape densely packed cities. The trend of purchasing a second home has sent home prices in seasonal towns skyrocketing in value by 19% for the year ending December 2020.
“Although demand is down slightly from the fall peak, the fact that nearly twice as many second-home buyers submitted applications in January as the year before means the popularity of vacation towns is not a fad,” Redfin economist Taylor Marr said in the press release. “Many Americans have realized remote work is here to stay, allowing some fortunate people to work from a lakefront cabin or ski condo indefinitely. But while many well-off remote workers are able to follow their dreams and purchase second homes, it has become even more difficult for many lower-income people to buy a primary residence as home values rise and the recession disproportionately impacts employees in the service sector.”