Demand for vacation-home mortgages fell 40% in 2023 as the average U.S. home price surged to a record high, Redfin reports.
Austin and the Bay Area saw the biggest declines in mortgages for second homes in 2023, according to the firm.
In total, U.S. homebuyers took out 90,772 mortgages for second homes in 2023, Redfin’s data shows. That’s down 65% from the height of the pandemic housing boom in 2021.
Mortgages for primary homes fell at half that rate; they were down 20% year over year in 2023 and down 35% from 2021.
Redfin used Home Mortgage Disclosure Act (HMDA) data covering purchases of second homes, primary homes and investment properties from 2018 to 2023 to arrive at its findings.
“Soaring prices pushed down demand for vacation homes last year, both for cash buyers and those getting a mortgage—but the latter pulled back even more because high rates exacerbated high prices,” says Heather Mahmood-Corley, a Redfin agent, in a statement. “There has been a small uptick in interest in second homes this year, mostly from cash buyers who plan to eventually move in full time. People who would need a mortgage are still sitting on the sidelines, waiting for rates to come down—especially because rates are typically even higher for second homes than primary homes.”
Just 3% of all mortgages went to second-home buyers in 2023, down from 5% in 2020.
The share of total mortgages that went to second-home buyers also dropped last year: 2.8% of all mortgage originations in 2023 were for second homes, down from 3.6% in 2022 and 5.1% in 2021.
Photo: Sebastian Staines