While the pandemic caused many people to reassess their living situations as the virus began ravaging the country during the first quarter of 2020, many made hard decisions, some went the complete opposite way by doubling down and purchasing a second home.
According to Pacaso, a technology-enabled real estate marketplace, the trend of people buying second homes has been so popular that it has increased 235% since the first quarter of 2020. This type of transaction increased 25% alone during the second quarter of 2022.
"Overall, luxury real estate exceeded expectations and outperformed the rest of the second home category and the overall real estate market in Q2 2022," said Austin Allison, Pacaso Co-Founder and CEO. "Despite a rising interest rate environment and growing concerns of a recession, it is clear that demand for this type of asset remains strong."
According to second home mortgage rate lock data analyzed by Pacaso's research team, sales of luxury second homes and investment properties—which are defined as homes sold for $1 million or more that are designated for seasonal and/or recreational use—increased nearly 25% year-over-year during the second quarter of 2022 and approximately 235% compared to Q1 2020, prior to the pandemic intensifying in the U.S.
"Affluent consumers tend to be more insulated from the impacts of an economic downturn," continued Allison. "Some consumers will look to real estate as a more stable place to park their money during times of increased market volatility. Although they may trim their budgets, this group is less likely to completely drop out of the market. As a result, demand for luxury real estate remains strong, but the acceleration of home price appreciation for this category will likely continue to slow as we saw during Q2 2022."
Click here to read Pacaso’s report in its entirety.