Sales of vacation homes have fallen by three quarters from their peak during the pandemic as soaring interest rates and limited housing stock deters would-be buyers.
Some 16 percent of existing home sales are now for vacation properties, down from a peak of 22 percent in January 2022, data from the National Association of Realtors (NAR) show. The figure remains above the 14% average from late 2015 through to the first half of 2020.
And a report from mortgage services firm Optimal Blue cited by Reuters shows that house sales in tourist hotspots Hilton Head Island, South Carolina, and Lake Havasu City, Arizona, have effectively dried up this year. Across the board, vacation home sales have fallen by 75%.
Second homeownership rocketed during the pandemic when wealthy city-dwellers snapped up extra properties in idyllic areas to spend lockdown. The widespread shift to working from home also unchained workers from their urban offices.
By October 2020, the number of Americans buying second homes had doubled from the same month a year earlier – according to data from Redfin.
Second homeownership rocketed during the pandemic when wealthy city-dwellers snapped up extra properties in idyllic areas to spend lockdown. But figures show the trend is on decline
But several indexes suggest the trend is on the decline.
Hilton Head Island and Lake Havasu City saw sales volumes tank by 83 percent and 87 percent respectively, according to Optimal Blue.
Experts say the trend is being driven by a widespread housing shortage.
Chuck Tuttle, vice president of sales at William Raveis Real Estate on Cape Cod, told Reuters: ‘Homes are just not available.
‘When quality secondary homes come on the market and they’re prepared and presented correctly, they go quite quickly regardless of the price point.’
The issue has been exacerbated by soaring mortgage rates which is sending the cost of homeownership spiraling.
Optimal Blue figures show that vacation home purchases peaked during the third quarter of 2020 when mortgage rates were around 3 percent.
The issue has been exacerbated by soaring mortgage rates which is sending the cost of homeownership spiraling
Homebuyers today face paying $500,000 more in the course of a 30-year mortgage than they would have done two years ago after rates shot up to 8 percent
But the Federal Reserve’s battle to tame inflation has sent interest rates soaring to a two-decade high.
Data from Government-backed lender Freddie Mac shows the average rate on a 30-year fixed loan is now 7.79 percent.
Softening demand for vacation homes is having a knock-on effect on home contractor businesses in tourist hotspots.
Tim Allen, owner of Kopa Home Services in Flagstaff, Arizona, said: ‘Services for existing rentals has grown, but services for larger ticket remodeling work on new vacation rentals has stopped.
‘I can’t recall any large project or make-ready that we’ve done on a new vacation rental owner this year.’
Content source – www.soundhealthandlastingwealth.com
