Second Homes were on fire, like the rest of the housing market during a pandemic. In general, their appeal is largely twofold: people buy them to use them as a haven for pleasure and / or work from home in a pleasant location, and / or as a home for investment. rent to others when you’re not around.
Now there is a new report that indicates some cooling of this segment of the residential real estate market at our fair.
Redfin (NASDAQ: RDFN) said in a recent blog that “demand for second homes fell 21% year-on-year in July, the second consecutive month in which the number of mortgage lockups fell annually. This happened after 13 months of a sharp increase in secondary home purchases. “
Blocking a rate in a market that is slowing down a bit
Tracking mortgageA rate lock, where the lender guarantees the rate for a specific period of time, such as 30 or 45 days, is a good way to gauge market activity, as each indicates that the buyer and seller are likely to have struck a deal.
The buyer must tell the lender if the mortgage is for a primary home, a second home, or investment property Such as rent… Redfin claims that about 80% of all mortgage locks result in actual purchases, so the decline seems to indicate a decline in sales.
Indeed, in recent years, similar indicators have been noted for other indicators, such as sales of newly built homes. And Redfin reported last week that while the national average home sales price was a record $ 362,750, that figure was virtually unchanged in the four-week period ending July 25, for the first time since early March.
The Listing Service also said that mortgage lockdown data showed that demand for primary home purchases fell 4% year over year in July, the first time that the rate of growth in demand for secondary homes has lagged behind the rate of growth in demand for primary housing since April 2020 during the peak of growth. blocking the pandemic.
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High prices are likely to blame for the decline in mortgage locks, as well as sales of both new and old homes, as accessibility issues affect the secondary housing market as strongly as the primary housing market.
Slowing down is not a stop, especially in this new norm. The market is still well ahead of last year’s and indeed many years ago, so slowing growth rates does not mean that the collapse is not far off… Second homes are no exception.
“The demand for second homes remains much higher than before the pandemic, and we can expect a high level of interest in holiday homes to persevere in a new era of remote work, ”Redfin lead economist Taylor Marr said in a blog post this week. “If you build it – against the backdrop of a historic housing shortage – they will come. I expect vacation homes to continue to be popular as more homes are built. ”
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