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Demand For Second Homes Is Way Down From Last Year’s Boom

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Soaring prices, rising loan fees, and sluggish financial markets have reduced demand for villas, which surged during the pandemic. There is still more demand for a second house than it was before the pandemic.

After the pandemic boom last year, demand for villas has dropped significantly.

Second-house mortgage rates rose 9.1% from pre-pandemic levels in April, substantially unchanged from the 8.7% revision rate in March, and fell from 15% in February. This is a dramatic drop from the second half of 2020 and 2021, when demand was 88% above pre-pandemic levels.

The end of the pandemic second home boom is the result of soaring home prices and soaring mortgage rates, which price many buyers. From the market..In addition, the federal government hiking The Second House Loan Fee, which begins April 1, adds approximately $ 13,500 to the cost of buying a $ 400,000 home for the average buyer.

“As monthly mortgage payments skyrocket, buyers move away from secondary homes faster than primary homes,” said Taylormer, Deputy Chief Economist at Redfin. “High prices and soaring mortgage rates have already discouraged buyers, and new loan fees are Weaknesses In financial markets – an additional obstacle. The second house is a bit more popular than it was before the pandemic, but it’s no exaggeration to say that the villa boom is over so far. When the stock market recovers, demand for second homes may recover. “

Demand for primary homes has outpaced demand for secondary homes for the third straight month. Mortgage rate locks on primary homes have risen about 37% from pre-pandemic levels in April. This is a level that hasn’t changed much since mid-2020.

Homebuyers’ interest in villas plummeted in February after a year and a half of intense demand. Interest in villas began to skyrocket in June 2020, with demand surpassing pre-pandemic levels by more than 54% for 20 consecutive months, with remote work and record low mortgage rates.

The landscape of buying a home is different now. Some workers are returning to the office, mortgage rates soar, 5.27% At the beginning of May, it increased significantly from 3.1% at the beginning of the year.

methodology

The data in this report is from a Redfin analysis of mortgage rate lock data from a real estate analysis company. Optimal Blue.. Redfin has created a seasonally adjusted index of Optimal Blue data to adjust for typical seasonal patterns, making it easy to compare demand for villas during and before a pandemic. Define “Before Pandemic” as January and February 2020 and set the index for that period to 100. Data points above 100 represent demand for a second home above the pre-pandemic level, and data points below 100 represent demand before the pandemic. level. This data is subject to revision.

Mortgage interest rate locks are an agreement between homebuyers and lenders that allow homebuyers to fix their mortgage rates for a period of time and provide protection against future interest rate increases. Homebuyers must specify whether to apply to secure a mortgage rate on a primary, secondary, or investment property.almost 80% Locking mortgage rates leads to a real home purchase.

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