Pandemic-driven demand for vacation homes dropped in March: report
Compared to pre-pandemic levels, demand for second homes is still up 13%
FOX Business Flash top headlines for April 13
Here are your FOX Business Flash top headlines for April 13.
The once frenzied demand for vacation homes is simmering as elevated mortgage rates and home prices knock out potential buyers from the market, according to a new report.
March marked the second month in a row when demand for these second homes dropped, according to Redfin. That figure was still 13% higher compared to pre-pandemic levels, but it’s slipped from the second home boom seen last year, the real estate brokerage reported.
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"The pandemic-driven surge in sales of vacation homes is coming to an end as mortgage rates rise at their fastest pace in history, causing some second-home buyers to back off," Redfin deputy chief economist Taylor Marr said.
Real estate agent Rosa Arrigo stands in the doorway as Giovani and Nicole Quiroz of Brooklyn, New York visit an open house in West Hempstead, New York on April 18, 2021. (Raychel Brightman/Newsday RM via Getty Images / Getty Images)
On top of that, Marr said the second-home loan fees, which kicked in earlier this month, also deterred potential buyers.
On April 1, those loan fees increased by about 1% to 4%, effectively. For example, this would add about $13,500 to the cost of purchasing a $400,000 home, the brokerage said.
"Plus, some buyers’ down payments—and their nerves—probably took a hit when the stock market dipped over the last few months," he added.
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According to Redfin, the demand for primary homes has remained "at roughly the same level since June 2020" but it's outpaced demand for second homes for the second month in a row.
Still, demand for second homes will be elevated compared to pre-pandemic levels due to remote work, according to the brokerage.