T
he demand for vacation homes in the US has continued to decline, with a 5% drop in second-home mortgages issued in 2024 compared to the previous year. This marks the lowest level since Redfin began tracking this data in 2018, with just 86,604 mortgages taken out for second homes. Second-home loans now account for only 2.6% of all mortgages issued, down from 5% during the pandemic-era peak.

    Several factors are contributing to the decline:

    * Rising costs: The median value of second homes has reached $495,000, far exceeding the median price of primary residences.

    * Changing priorities: With inflation squeezing household budgets, many Americans have pulled back on luxury spending, including vacation properties.

    * Cooling rental returns: The short-term rental market has softened as rents stagnate and competition increases.

    * Return to the office: As companies roll back remote work privileges, fewer buyers see the need for a getaway home.

    Florida is leading the decline, with Miami experiencing a 32.2% year-over-year drop in second-home mortgage originations. Rising property costs, insurance premiums, and heightened risk of natural disasters are deterring potential buyers.

    Despite the national downturn, some metros are bucking the trend, including Detroit, San Francisco, and San Jose. However, these areas still account for less than 2% of all home loans.

    Redfin's demographic breakdown reveals that high-income earners (median income of $280,000) make up a significant portion of second-home buyers, with Gen Xers dominating this group. White buyers also dominate the market, accounting for 79.7% of second-home mortgage originations.