Mortgage rate freezes for second homes reach an all-time high

Pacaso has released its Second Home Market Report, the latest and most localized data available for the top 50 second home markets. The report shows that in the first quarter of 2021, the percentage of mortgage rate locks for second homes reached its highest level on record, with the share of second home transactions reaching 5.7%.

Over the next two quarters, the percentage of second home rate blockages declined to 4.6% in the second quarter and 4.5% in the third quarter, while the share of second home transactions rebounded in the fourth quarter , reaching 5%. Mortgage rate foreclosure data is a leading indicator of second home buying activity.

This chart shows that the share of second home rate locks was on the rise at the end of 2021, after falling mid-year from an all-time high of 5.7% in the first quarter of 2022.

“Looking back on the past year, we saw the percentage of second home sales decline in the second and third quarters, after peaking in the first three months of last year,” Pacaso CEO Austin said. Allison.

“In April of last year, however, people stopped to pick up a pace, to see how things would develop in what everyone had hoped would be a post-pandemic reality. For some, that also meant going back to the office, and perhaps not coincidentally, sales of second homes have started to slow. But in recent months, many employers have finally decided to make remote work permanent. This seems to have stimulated a renewed interest in the property secondary.

Some 43 of the 50 counties tracked in Pacaso’s report saw double-digit second-home price growth in the fourth quarter. Mono County, California tops the charts in terms of price growth. With a median purchase price of $790,000, rates are up 83.7% from a year ago. The increase is likely due to several factors, including the area’s natural beauty, proximity to expensive West Coast population centers, and limited new construction.

Atlantic County, New Jersey has seen the largest annual declines in median sale prices for second homes. Down 14%, New Jersey was particularly susceptible to foreclosures, and according to new ATTOM data, New Jersey counties had the third highest number of foreclosures — 1 in 1,288 units — in the country in the fourth quarter. St. John’s County, Florida also saw an increase in transactions, with the second home mortgage lock-in rate up 9.7% year-over-year in the fourth quarter.

According to the report, most of the markets with the largest year-over-year increases in second home mortgage rate freezes were located in the southeastern part of Sumter County, Florida. Between Orlando and Tampa, saw the largest national increase in second home transactions, with a 65% year-over-year increase.

“Over the past year, we’ve been tracking emerging second home hotspots,” Allison said. “And in fact, Sumter is a perfect example of the kinds of places we call ‘adjacent vacation destinations’ that have caught our eye. If established second-home destinations are like Broadway, these nearby emerging destinations are like Off- Broadway, and their moment in the limelight when the sun comes.”

To download the full dataset, click here.

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