An analysis of Optimal Blue data for mortgage applications found an 84% year-to-year growth in second-home loans – more than double the increase for primary homes.
SEATTLE – Mortgage applications for second homes soared 84% year-over-year in January, according to analytics from Optimal Blue. Redfin published a report on the data.
The 84% is down a bit from a peak 118% year-over-year increase in September, but it’s the eighth straight month of 80%-plus year-over-year growth in second-home markets.
The annual rise in second-home applications is more than double the increase in applications for primary homes. Demand for primary residences rose 36% year-over-year in January, down from a 65% peak in September. It’s the smallest increase since May for primary home mortgage applications.
Redfin says it analyzed mortgage-rate lock data from Optimal Blue because homebuyers locking in a rate must specify whether they’re applying for a primary home, a second home or an investment property. Roughly 80% of mortgage-rate locks result in actual home purchases.
The report doesn’t suggest a reason for the uptick in second-home sales, but it likely stems from an increased ability to do remote work during the coronavirus pandemic. More affluent Americans are opting to spend part of their time outside densely packed cities and in vacation destinations.
“Although demand is down slightly from the fall peak, the fact that nearly twice as many second-home buyers submitted applications in January … means the popularity of vacation towns is not a fad,” says Redfin economist Taylor Marr. “Many Americans have realized remote work is here to stay, allowing some fortunate people to work from a lakefront cabin or ski condo indefinitely.”
However, lower-income Americans have increased challenges just buying a primary home, Marr says, as “the recession disproportionately impacts employees in the service sector.”
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