The pandemic rush to buy a beach house or mountain retreat is cooling as offices reopen and buyers balk at high prices.
Starting in June 2020, well-heeled Americans looked to buy vacation homes to ride out months of remote work and school. That caused demand to more than double overnight, according to an analysis of mortgage data from Redfin Corp.
Demand stayed high for most the past year. Last month, however, the increase was just 48%. While that’s still a significant jump, it’s off depressed levels at the start of the pandemic when much of the home-buying market was frozen.
Redfin said the recent shift is likely due to a number of factors, including that many companies are looking to reopen offices. Soaring home prices haven’t helped, either.
“Vacation-home buyers are starting to react to rising prices,” Daryl Fairweather, chief economist at Redfin, said in a statement. “Home prices have been climbing rapidly for the last several months, and it seems they’ve finally gotten prohibitively high for some people searching for second homes.”
Tighter mortgage rules could also be weighing on second-home buyers, Redfin said. Loans for such purchases, along with those for investment properties, can only make up 7% of a lender’s total pipeline, according to new federal requirements.
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