New heat index: California’s hottest second home markets
Published Date: January 6, 2023
Second home destinations have never been more in demand. To help track the trend, Pacaso has developed the Second Home Heat Index to identify a state’s 10 top second home markets. First up: the Golden State. The California real estate market has been surging for years, but more recent changes in local market dynamics and the rise in second home buyers point to a shifting real estate landscape. To determine the markets that made the list, Pacaso looked at California cities where at least 25% of homes were not primary residences, and weighed annual home value appreciation, inventory levels, price reductions and time on market. The Second Home Heat Index reveals a list of California cities that, in addition to a high percentage of second home inventory, have seen increased buyer demand, fierce competition, and spikes in home values.“A crucial pandemic-driven shift in the freedom to live anywhere has permanently altered the U.S. housing market, and has made second home ownership more desirable than ever,” said Pacaso CEO and Co-founder Austin Allison. “Aspiring buyers are shopping for second homes that are within driving distance to their home base, and they are searching for more affordable second home markets like Lucerne Valley and Cathedral City.” These hot destinations tend to be close to major cities and feature vacation-friendly amenities. They are also comparatively less expensive than popular neighboring markets. Two of the top California cities, Truckee and Cathedral City, border the more well-known destinations of Lake Tahoe and Palm Springs. A few established favorites like Malibu also made the lineup. Here are California’s 10 hottest second home destinations.
Median home value: $875,300 (+27% YoY)Median days on market: 38The pandemic drove Bay Area buyers to scoop up real estate all around Lake Tahoe, and while sales volume increased nearly everywhere in the region, Truckee saw some of the biggest gains. Situated just north of Lake Tahoe, Truckee has the allure of an Old West town paired with world-class outdoor recreation and epic ski resorts. Bordered by the stunning Sierra Nevada mountains, Truckee is a year-round destination, with swimming and water sports at Donner Lake and along the Truckee River. Homes in Truckee tend to be single-family houses with at least four bedrooms, and often feature mountain lodge and cabin-style architecture.
2. Paso Robles
Median home value: $594,700(+12% YoY)Median days on market: 10Paso Robles, along the central coast of California, is about halfway between San Francisco and Los Angeles. Once rich in agriculture, the region has gone on to make a name for itself as a world-class wine country destination. With over 200 vineyards and many more sunny days, wine lovers flock to this area to take in the sunlit rolling hills, almond and olive groves, and dazzling wines.
3. Cathedral City
Median home value: $394,100(+18% YoY)Median days on market: 35Known by locals as “Cat City,” this desert resort town is one of nine cities located in the Coachella Valley and is just six miles from Palm Springs. It’s named after Cathedral Canyon, located just south of town in the Santa Rosa and San Jacinto Mountains, where rock formations are said to be reminiscent of a cathedral. Much like Palm Springs, Cathedral City is known for its sunny desert climate, excellent golf courses and proximity to sweeping desert vistas.
4. Lucerne Valley
Median home value: $225,000 (+13% YoY)Median days on market: 71Lucerne Valley, located in the southern Mojave Desert, is defined by the San Bernardino Mountains, Ord Mountains and Granite Mountains. Its proximity to Big Bear and the San Bernardino forest has made this desert town a new hot spot for aspiring second home owners. Land and real estate in this region remain very affordable relative to other California second home markets despite its double digit price growth.
5. Joshua Tree
Median home value: $309,500 (+30% YoY)Median days on market: 22The town of Joshua Tree is famous for its national park named after the unusual wind-gnarled trees that populate it. The park is the closest national park to San Diego and Los Angeles, and includes hundreds of miles of terrain that boast some of the most dramatic scenery in the Southwest. The town of Joshua Tree is home to a small but eclectic mix of bars, restaurants and galleries. This past year, Joshua Tree home values have skyrocketed up 30%, an annual increase that tops all the destinations on our list.
6. Mammoth Lakes
Median home value: $533,300(+7% YoY)Median days on market: 38Mammoth Lakes, in the heart of California’s Sierra Nevada mountains, is named after the grandeur of its surrounding snow-capped peaks and numerous crystal blue lakes. Home also to Mammoth Mountain, one of the best skiing destinations in California, the town of Mammoth attracts skiers, nature lovers and mountaineers alike.
7. La Quinta
Median home value: $552,800 (+17% YoY)Median days on market: 37La Quinta is nestled in the Coachella Valley, adjacent to hot spots like Indian Wells. Known as a leading golf destination in the U.S., La Quinta is also making a name for itself as a sunny snowbird getaway. Spanish architecture, sunshine and the beautiful backdrop of the valley makes this a popular destination for second home owners.
Median home value: $1,029,400 (+11% YoY)Median days on market: 46This small oceanside city is several miles east of Santa Barbara on a coastal plain between the Pacific Ocean and the stunning Santa Ynez Mountains. Home buyers are attracted to sandy beaches with calm waves, while surfers find swells along rockier parts of the shoreline. Carpinteria’s rich wildlife, like its tide pools brimming with sea creatures and the Carpinteria Salt Marsh Reserve’s array of sea birds, make this beach town an especially desirable destination for nature enthusiasts and outdoor adventurers alike.
9. Morro Bay
Median home value: $772,500(+11% YoY)Median days on market: 15Morro Bay is a coastal city located about halfway between Monterey and Santa Barbara, and it’s equidistant to San Francisco and Los Angeles. Its landmark namesake, Morro Rock, is an extinct volcanic peak at the end of Morro Rock Beach, and explains why many people refer to the area as the “Gibraltar of the Southwest.” Tourists and residents enjoy Morro Bay’s quaint fishing village vibe, and the striking landscape serves as a picturesque place for year-round boating, kayaking, surfing, golfing and hiking.
Median home value: $3,559,000 (+7% YoY)Median days on market: 141Malibu has long been a premier destination for the famous and not-so-famous. With wide sandy beaches and legendary surfing spots, Malibu is alluring but cost prohibitive for many. Beyond the many beaches and high-end homes along the Malibu coastline, you’ll find dozens of parks and hiking trails in the Santa Monica Mountains. This past year, home sales volume and prices grew in this luxury beachside hotspot as people saw the benefit in second home ownership despite the already-high median home value.Sources: Relevant data on the California real estate market and local trends was compiled from various sources, including the U.S. Census Bureau, NHGIS, Zillow, Redfin, Realtor.com and the regional MLS.