According to a new report from Redfin, the demand for second homes and investment properties was up 83% from pre-pandemic levels in November, an increase over October's 72% increase, but still below January 2021's record reading of 91%.
Demand remains high as many businesses are offering full remote and/or hybrid work situations for their staff, leaving many affluent white-collar workers with the ability to work from beach houses and ski chalets, according to a recent Redfin recap of 2021 trends.
But even as the overall housing market has begun its typical seasonal cooldown, demand is expected to remain above pre-pandemic levels.
"A combination of permanent remote-work policies and record-low mortgage rates is contributing to an uptick in demand, with buyers racing to snag vacation homes before interest rates increase further," said Redfin Deputy Chief Economist Taylor Marr. "I expect demand for second homes to remain strong for at least the full duration of the pandemic, which is now being prolonged by the spread of the Omicron variant."
Not all these second home purchases were sold to remote workers, as real estate investors contributed to the elevated interest in second homes. Redfin found that real estate investors bought 18.2% of the homes purchased nationally during Q3 of 2021, a record-high share, up from 11.2% year-over-year. In dollar terms, investors bought a record $63.6 billion worth of homes over that period, up from $35.7 billion a year earlier.
Continued low rates remain on the side of those seeking second homes and investment properties as Freddie Mac’s latest Primary Mortgage Market Survey (PMMS) shows that the 30-year fixed-rate mortgage (FRM) averaging 3.12% for the week ending December 16, 2021. Rates in the 3% range may quickly turn upward as earlier this week, the Fed announced the acceleration of the tapering of its bond buying program, which is expected to force mortgage rates higher as a result.
Redfin's report is based on an analysis of mortgage-rate lock data from real estate analytics firm Optimal Blue. Homebuyers must specify whether they are applying to secure a mortgage rate for a primary home, a second home, or an investment property.