Demand for Vacation Homes Nosedives

HOUSTON – (By Dale King, Realty News Report) — The COVID pandemic that gripped the nation a few years back brought little of tangible value to the U.S.A. However, it did boost the market for acquiring second homes as countless folks exited urban areas to purchase properties where they could escape the virus and create remote home offices and suburban lifestyles.

But that period has ended, and the big numbers racked up for secondary home buys – also called “vacation” properties – have dwindled dramatically.

Real estate brokerage Redfin just published its analysis of Home Mortgage Disclosure Act (HMDA) data covering purchases of second homes, vacation residences and investment properties from 2018 to 2024. (The report uses the term “vacation home” interchangeably with “second home.”)

The study’s major finding is that Americans today are purchasing only about a third as many vacation homes compared to the pandemic buying boom.

“Most people aren’t buying vacation homes at all because mortgage rates and insurance costs – especially for waterfront homes and condos – have skyrocketed,” said Lindsay Garcia, a Redfin agent in Fort Lauderdale, Fla. “People know they’re unlikely to earn much revenue from listing on Airbnb now that occupancy rates are down.”

Wealthy cash buyers are still purchasing second homes, she said, but “they are much more likely to make a low-ball offer or request concessions than they used to.”

The Redfin report says U.S. homebuyers took out 86,604 mortgages for second homes in 2024, the lowest number listed in records dating back to 2018 — and down 5 percent from a year earlier.

High prices and mortgage rates, along with the return of required in-office work for most employees, have made the prospect of owning a second home less appealing than it once was, the report notes.

While mortgages for second homes dropped to a six-year low in 2024, the rate of decline slowed considerably from the two prior years. In 2022, second-home mortgages fell 42 percent year-over-year, and in 2023, they dropped 40 percent.

The big declines in 2022 and 2023 were due largely to the surges in 2020 and 2021 spurred by affluent Americans taking advantage of low mortgage rates and remote work prospects.

Second-home mortgages made up just 2.6 percent of all mortgages in 2024 — the lowest share on record. That’s down from 2.8 percent the year before and a peak of 5 percent in 2020.

Demand for homes was decidedly slow in 2024 because it was the second-least affordable year on record for the purchase of all types of residences, due to high home prices and soaring mortgage rates. But demand for second homes fell more precipitously than it did for primary homes.

Second home mortgage originations in Texas metros

The Redfin report listed second home mortgage origination figures for the 50 most populous cities in the country.

In Texas, four of the five largest metros all recorded reductions in the percentage of filings last year compared to 2023. Only Dallas, where 467 second home mortgage originations were filed, up 4.2 percent from the year before, improved.

Other Lone Star State cities in the report were:

Austin, 372 originations, down 4.1 percent.

Fort Worth, 181 originations, down 15.8 percent.

Houston, 1,050 originations filed, down 5.7 percent.

San Antonio, 407 originations, down 7.1 percent.

The report lists reasons why mortgages for second homes are falling fast:

Second homes are more expensive. The median value for second homes nationwide was $495,000 in 2024 compared to $385,000 for primary homes. Plus, loan fees for second homes increased in 2022, raising the total cost of buying one.
Vacation homes aren’t a necessity. Inflation raised the price of nearly everything in 2024, prompting many Americans to cut back on unnecessary expenses.
The rental market has cooled. Purchasing a second home to rent is less appealing than it used to be because asking rents are no longer growing, and the short-term rental market has cooled from its peak.
In-office work revival. Many workers have less time to spend in a vacation home than during the pandemic because employershave told many to return to the office.

Redfin also looked at who bought vacation homes in 2024, breaking down data by income level, age and race:

High earners: Nearly nine in 10 (86.4 percent) second-home mortgages issued in 2024 went to high-income buyers, with 7.5 percent going to middle-income buyers and 2.7 percent to low-income buyers.
Gen Xers: 30.2 percent of second-home mortgages went to 55–64-year-olds in 2024, and another 28.4 percent went to 45–54-year-olds. Next came 35–44-year-olds, who made up 20 percent of vacation-home mortgage originations, followed by 35–44-year-olds (20 percent) and 65–74-year-olds (12.5 percent). While Gen Xers took out the lion’s share of vacation-home mortgages, the total was smaller than the year before.
Baby boomers were the only buyers who took out more vacation-home mortgages in 2024 than the year before — up 4.5 percent for 65–74-year-olds and up 8.6 percent for 74-plus.

Image: Cynthia Lescalleet, CALpix, Realty News Report 2025

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