Second homes lost their luster in 2024 as homebuyers only took out 86,604 mortgages on these properties, down 5% year-over-year to the lowest level dating back to 2018.
According to data from Redfin (NASDAQ: RDFN), second home mortgages made up only 2.6% of all mortgages last year, down 2.8% from 2023 and down from the 2020 peak of 5%. Last year’s percentage is the lowest share on record.
The term “second home” is used interchangeably with “vacation home” in Redfin’s report, which attributed the decline to diverse considerations including the expense factor – the median value for second homes nationwide was $495,000 in 2024, compared to $385,000 for primary homes – coupled with inflation, a cooling rental market, and the shift away from remote work to in-office work.
Demand for vacation homes is falling fastest in Florida. In Miami, second-home mortgage originations dropped 32.2% year-over-year in 2024, more than any other major metro.
“Most people aren’t buying vacation homes at all because mortgage rates and insurance costs – especially for waterfront homes and condos – have skyrocketed,” said Lindsay Garcia, a Redfin Premier agent in Fort Lauderdale. “Plus, people know they’re unlikely to earn much revenue from listing on Airbnb now that occupancy rates are down. While some wealthy cash buyers are still purchasing second homes, they are much more likely to make a low-ball offer or request concessions than they used to be.”
As for those buying second homes, nearly nine in 10 (86.4%) second-home mortgages issued in 2024 went to high-income buyers, and more than half of those mortgages went to Gen Xers. Four in five (79.7%) second-home mortgages went to white homebuyers in 2024, compared to Asian (6.4%), Hispanic (6%) and Black (2.6%) homebuyers. All racial demographics took out fewer second-home mortgages in 2024 than the year before.
