After years of fairly predictable sales, second home purchases began to show signs of a small but steady increase in the late 2010s. Interesting, but not remarkable – until the pandemic struck. Suddenly, the idea of owning a second home, perhaps to escape crowded cities, has become appealing to more buyers, and the demand has increased, increased again and has recently taken hold.
Does that mark the end of the second roller coaster ride at home? Where are second home sales today? To help answer these questions, Pacaso released his Second Home Market Report in October 2021. The report looked at transaction volume, as measured by lockdowns on second home mortgage rates, and median purchase prices for the top 50 second home markets in the United States.
Here are some key points to remember.
Sales of second homes are down, but everything is relative
Compared to summer 2020, sales of second homes in summer 2021 were around 27% lower. But sales had hit record highs in that first pandemic summer, with buyers looking desperate to flee their primary residences. Focus on the relative stability of “before”, the overall market share of second homes remains higher than pre-pandemic levels: 4.3% in summer 2021 against an average of 3.8% between 2017 and 2019 represent a healthy segment of the buying pool – and it’s likely that even more second home buyers will sit on the fence, waiting for you to help them find an affordable vacation home.
Fewer transactions, higher prices
While the volume of second home transactions is declining, people are paying more, much more, in some cases. This finding is probably not a surprise. Inventories are tight across the country, in both the primary and secondary housing markets. When supply is limited, prices tend to increase. Pacaso’s report found significant price increases from summer 2020 through summer 2021 in almost every second home market, with double-digit jumps in 49 of the 50 counties analyzed. The largest increase was recorded in Kauai County, Hawaii, with a median purchase price of $ 1.25 million, up 83.3% from 2020. Notably, Kauai was also the one of four out of 50 counties where transaction volume has actually increased year over year.
Buyers are venturing into new markets
With little accommodation available in popular vacation destinations, neighboring markets are gaining ground. Wasatch County, Utah, is a good example. Wasatch County borders Summit County – home to Park City and its popular ski resorts – and historically had median house prices significantly lower than its neighbor. That all changed in 2021. Perhaps due to inventory constraints in Park City, or the perception that Wasatch County was a more affordable alternative, interest and prices increased, pushing up the median price of homes in Wasatch County by 54% year over year – even higher than the median price in Ritzier Summit County.
The report finds evidence of this trend in many areas, but there are still opportunities for second home buyers to find cheaper homes in up-and-coming vacation destinations that offer the same types of amenities and rental options. recreation than their better-known neighbors. Agents can help their second home buyers by identifying those markets that meet their customers’ needs while offering a slightly lower price. Another option is condominium, which can get buyers to second homes in the best destinations for considerably less cost, without bidding wars, and gives them the amount of property they will actually use.
Pacaso is the modern way to buy and own a second home. We bring together buyers to collectively buy and own a second home, and provide a fully managed end-to-end service. We’re making second home ownership possible and enjoyable for more people.