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Second home market trends: Key takeaways
- National second home rate locks soared during the pandemic, more than doubling their level from a year earlier (peaking at 103.7% YoY growth as of fall 2020), but fell 26.6% YoY this summer.
- Second home mortgage rate locks continue to account for a higher share of the total market than they did before the pandemic.
- 49 of the 50 top destinations saw double-digit price growth in the summer months.
- Kauai County, Hawaii, saw the greatest appreciation, with second home median sale prices up 83.3% YoY.
Second home market cooled in summer, but still relatively hotAcross the nation, second home rate locks — a proxy for second home transactions — increased throughout the pandemic, peaking in summer 2020 and again in spring 2021, but falling 26.6% year over year this past summer. Despite this recent cooling of the pandemic-fueled second home surge, overall market share of second homes is still up from pre-pandemic levels. From 2017 through 2019, second home transactions averaged a 3.8% quarterly market share of all rate locks. As of summer 2021, that percentage was up from pre-pandemic levels, with second homes comprising a 4.3% market share.“A year ago as Pacaso was preparing to launch, we wanted to better understand the second home market, and quickly realized there was a massive gap in local, timely second home data,” said Pacaso CEO Austin Allison. “It’s estimated that there are nearly 10 million second homes in the U.S., and with pandemic-driven shifts that have allowed people greater flexibility around where they live and work, we expect to see this number continue to grow. The second home housing market represents a significant subset of the market that is critical to watch in order to fully understand the U.S. housing market.” The Pacaso Second Home Market Report, which analyzes timely and localized data for the top 50 second home markets, is a composite including property use and mortgage rate lock data. It includes counties with a percentage of seasonal homes and median home values at or above the top 20th percentile. Mortgage rate lock data is a leading indicator of consumer second home buying activity.
Transaction volumes decreasing, but home prices up across top 50 marketsMost of the top vacation destinations are seeing second home mortgage rate locks decline, but prices remain highly elevated and continue to rise. All but one county tracked in Pacaso’s report saw double-digit price growth in second home purchase prices this past summer. Kauai, Hawaii, saw the highest growth, with a median purchase price of $1.25 million, up 83.3% compared to a year ago. The island of Kauai has seen sharp growth in tourism and leisure travel since travel bans to the area were lifted. Wasatch County, Utah, and Gunnison County, Colorado, also saw sharp increases in second home purchase prices, up 53.9% and 53.2% respectively year over year. Prior to this spike, Wasatch County historically had a lower median second home price than neighboring Summit County, Utah, which is home to popular resort town Park City. Meanwhile, Gunnison County, located in the Colorado Rockies and home to ski resort Crested Butte, still has a lower median second home price than neighboring Summit County, Colorado, which is home to a number of famous ski destinations like Breckenridge, Keystone, and Copper Mountain. Of the top 50 second home destinations analyzed, 46 saw a year-over-year decline in transaction activity in the summer months. However, trends in four second home markets stood out as exceptions:
- In Kauai, Hawaii, rate locks for second homes were up 23.5%.
- Summit County and Eagle County, Colorado, saw annual increases of 10.2% and 9.8%, respectively.
- Boise County, Idaho, saw a 4.4% increase in second home mortgage rate locks year over year.