RALEIGH – Whether along North Carolina’s coast or in the mountains, the pandemic-era vacation home boom continues.
Demand for second homes, also known as vacation homes, is up 87% according to national real estate brokerage firm Redfin, which analyzed nationwide mortgage data from the fourth quarter of 2021.
That far outpaces the demand for primary residences, which is up 42% in in the data set compared to pre-pandemic levels, Redfin found.
“Demand for second homes was strong in January as buyers tried to lock in relatively low mortgage payments,” said Taylor Marr, deputy chief economist for Redfin, in the new report. “Mortgage rates surpassed 3.5% in January for the first time since March 2020, encouraging buyers who were on the fence about purchasing a vacation home to commit before rates increase further.”
Another recent Redfin analysis saw Raleigh residents could be most affected by an increase in mortgage rates, when it comes to identifying a primary residence considered affordable. Redfin economists are predicting an average rate of 3.9% for 30-year fixed mortgages by the end of 2022. In early January, 30-year fixed mortgage rates were about 3.1%, on average.
Raleigh homes are about to get even less affordable, economists find
Seasonal towns seeing a boom
Redfin’s data showed that home prices in what their analysts considered “seasonal towns” are up 20% nationwide in December 2021 compared to December 2020, the latest month of available data. And that’s the 18th straight month where the year-over-year change is in the double digits, Redfin said.
Nationwide, the typical home in a seasonal town sold for $501,000 in December 2021, the analysis found.
But in non-seasonal towns, the median sale price rose 13% and was found to be $408,000.
At the same time, the study found that there are fewer homes for sale in these seasonal towns, which Redfin defined as “as an area where more than 30% of housing is used for seasonal or recreational purposes according to the 2019 Census.”
In seasonal towns, the number of homes for sale was down by 29% in the fourth quarter of 2021, compared to a 16% decline in inventory in non-seasonal towns.
“While I expect demand for second homes to remain higher than it was before the pandemic, mostly because of remote work, it may fall slightly in the coming year as mortgage rates continue to go up and fees for second-home loans increase,” said marr.
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