Second Home Rate Locks Are On The Rise – NMP

In the first quarter of 2021, the percentage of second home mortgage rate locks hit an all-time high, with the second home share reaching 5.7%. Subsequently, the percentage of second homes locked fell to 4.6% in the second quarter and 4.5% in the third quarter. But the share of second home transactions rebounded in the fourth quarter to 5%.

This insight comes from the Pacaso Second Home Market Report, analyzing data from the top 50 second home markets. It uses mortgage rate foreclosure data as a leading indicator of second home buying activity.

These rate freezes come before the implementation of new up-front fees by the FHFA affect high-balance mortgages and vacation homes sold at Fannie Mae and Freddie Mac. And, as is the case with most fee hikes, the cost will be passed on to borrowers in the form of higher interest rates.

“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.

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.

The southeastern part of the United States has seen the largest increase in the number of locks for second homes, year over year. Sumter County, Florida, located between Orlando and Tampa, saw the largest national increase in second home rate foreclosure transactions, with a 65% year-over-year increase.

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

Florida’s St. John’s County also saw an increase in transactions, with second home mortgage rate freezes down 9.7% from a year earlier. One of the most notable cities is St. Augustine, located south of Jacksonville and north of Daytona Beach. St. Augustine is also known as “the ancient city” due to its historic landmarks and cobbled streets dating back to the 1500s.

Atlantic County, New Jersey, home to Atlantic City, saw the largest annual declines in second home transactions, down 14% year over year. This may be because New Jersey is particularly susceptible to foreclosures. According to ATTOM data, New Jersey counties had the third-highest number of foreclosures in the nation in the fourth quarter (1 in 1,288 units).