Most second home buyers own their primary residence, but an increasing number of renters are choosing to purchase a second home — while holding onto their rental. Real estate agents who work in second home markets recently shared their experiences and insights about this trend. So, who are these renter-buyers? And why are more of them opting to buy second homes right now? This particular group of renters tends to include affluent residents of large metropolitan areas — think New York or San Francisco. They can afford to buy, but given the high cost of real estate in many major cities — 2020 saw the biggest jump in the number of “million-dollar cities” in a decade — they’re hesitant to pour their cash into an in-town residence. While a city rental is practical for work, a larger second home in the suburbs may be a more appealing prospect.
A trend hastened by the pandemic
These urban renters were already primed to consider a second home, but the threat of Covid-19 spurred them to action, “solidifying” and accelerating an emerging trend, according to agents. For renters with the means to do so, getting away from crowded cities suddenly seemed not just preferable but urgent. The ability to work and attend school remotely made it easier for families to make the move and take advantage of the suburban or rural amenities that had been on their wish lists, like a pool or extra land. Because future plans remain uncertain — some people may need to return to offices once the pandemic is over — these second home buyers are keeping their rentals to ensure they have a place in the city if and when they need it.
Second homes in Napa — a special case
The phenomenon of renters buying second homes isn’t limited to a particular region. Hillary Ryan, a Compass agent specializing in second homes in Napa, noted that colleagues in second-home markets across the country are reporting similar trends. Her market, however, which includes the Bay Area, has undergone perhaps the most notable shift as a result of Covid-19. A report released in the summer of 2020 found that compared to several other large cities, San Francisco has experienced the most significant exodus of residents since the start of the pandemic. The report looked at for-sale inventory, but renters are leaving in droves as well, as indicated by continued sizable drops in rent prices. Renters in San Francisco and other pricey Bay Area cities are finding refuge just north of the bay in the semi-rural Napa Valley. Buying a second home there gives renters an opportunity to own a more spacious, private residence away from the noise and congestion of the city. Ryan has several clients who are maintaining their San Francisco rentals but purchasing a second home in Napa, and she attributed her substantial jump in sales over the summer to this new set of clients. Ryan believes many of her clients may ultimately decide to make their second home in Napa their primary residence, perhaps commuting to the city and using their rental as a backup option as needed. She has already seen some families enroll their children in Napa Valley schools.
The desire for space and privacy
Agents representing second home clients throughout the U.S. report similar experiences. They say urban renters are craving space, nature, views and the “serenity” of a more rural environment. This may be a reaction, in part, to pandemic-related restrictions — for many of us, particularly residents of dense cities, personal space and privacy have been in short supply. Once the pandemic has passed, we may see a reversal of the urban-to-suburban migration. Still, the desire for a comfortable retreat with amenities not available in a smaller city home is not likely to fade, even if residents opt to move back to their urban dwellings.
Find your personal retreat
When you buy a second home with Pacaso, you enjoy all the benefits of true ownership without the hassles of maintenance and upkeep. Our unique co-ownership model makes it easier for you to own a beautiful second home in Napa, Tahoe, Aspen, Miami, Palm Springs and many other desirable markets. View our luxury listings today.
Pacaso Second Home Market Report: Transactions have slowed, prices have soared