Second homes have grown along with the rest of the housing market during the pandemic. Their overall appeal is largely twofold: people buy them to use as a getaway for fun and / or to work from home in a nice place, and / or as an investment home to rent from. others when you are not there yourself.
Now there is a new report which indicates some cooling of this segment of the residential real estate market in our just land.
Red tuna (NASDAQ: RDFN) said in a recent blog that “demand for second homes fell 21% year-on-year in July, the second consecutive month of annual decline in mortgage buyouts. This follows 13 months of strong activity in second home purchases. “
Lock in a rate in a market that is slowing down slightly
Tracking mortgage rate freezes – in which a lender guarantees a rate for a period defined as 30 or 45 days – is a good way to assess market activity, as each indicates that a buyer and seller have likely made an agreement.
The buyer must tell the lender whether the mortgage is for a primary residence, a secondary residence or an investment property such as a rental. Redfin says about 80% of all mortgage locks result in an actual purchase, so a drop in those seems to indicate a drop in sales.
Indeed, similar performance has been seen recently in other metrics, such as sales of newly built homes. And Redfin reported last week that while the nationwide median home selling price was a record high of $ 362,750, that metric was actually stable for the four-week period ending July 25, the first time around. since early March.
The ad service also said mortgage freeze data showed demand for major home purchases fell 4% year-on-year in July, marking the first time that the rate of growth in demand for homes fell. secondary buildings was lower than that of the main houses since April 2020 at the height of pandemic lockdowns.
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High prices are likely driving down mortgage lockdowns and sales of new and existing homes, as affordability issues affect the second home market as surely as they do for primary residences. .
A slowdown is not a stop, especially in this new normal. The market is still way ahead of last year and, in fact, for many years, so slowing growth rates don’t mean a collapse is in sight. Second homes are no exception.
“The demand for second homes remains well above pre-pandemic levels, and we can expect the high level of interest in vacation homes to persist in the new era of remote working,” said the Redfin senior economist Taylor Marr in this week’s blog. “If you build it – in the midst of a historic housing shortage – they will come. I expect vacation homes to remain popular as more homes are built. “
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