If you need assistance, please call 707-486-5400

GARRETT FORBES REALTOR® Housing Market Update May 2021

GARRETT FORBES REALTOR® Housing Market Update May 2021

Despite the nationwide rollout of COVID-19 vaccinations and a return to life as once was normal, pandemic-driven demand for second homes is soaring, as many remote workers are opting to spend at least part of their time in vacation destinations, even as some companies are planning for workers to return to the office. According to Redfin, the number of home buyers who locked in mortgage rates for second homes shot up a record 128% year-over-year in March, marking the 10th consecutive month of 80%-plus annual growth.

When compared to the start of the pandemic in the U.S., the annual rise in the demand for second homes is nearly quadruple the 34% year-over-year gain for primary homes.

"This recession has driven wealthy and low-income Americans further and further apart, and the soaring demand for vacation homes during the pandemic is a perfect example of their unequal financial footing, with some people buying second homes and others unable to buy their first," said Economist Daryl Fairweather. "Home prices just keep going up. That's a good thing for Americans who already own one home because they can take advantage of their increased equity to buy other assets, which in some cases includes another home. But it's bad for lower- and middle-class families, particularly those who are renters, because the barrier to homeownership is getting higher and higher."

Interest in vacation homes is on the rise as uneven financial recovery is taking place throughout the U.S.

“Wealthy Americans are likely to have held onto their jobs—many with the freedom to work remotely—and they're earning money through a robust stock market and rising real-estate values” said the report. “But people in lower-income brackets are more likely to work in industries like restaurants, retail and hospitality that are still far from recovered.”

Home prices in seasonal towns, where second homes are often located, are up more than prices in non-seasonal towns. The median sale price for homes in seasonal towns rose 19% year over year in February—the most recent month for which data is available—to $417,000, the eighth straight month of 10%-plus year-over-year growth.

For homes in non-seasonal towns, the median sale price rose 16% to $370,000. For this analysis, a seasonal town is defined as an area where more than 30% of housing is used for seasonal or recreational purposes.

A recent Redfin analysis found that the vacation towns and suburbs heating up the most include El Dorado County, Calif.—an area that spans from the eastern outskirts of Sacramento to the southern part of Lake Tahoe; Santa Cruz County, Calif.—an area in close proximity to both Silicon Valley and San Francisco; Deschutes County, Ore.—home to Bend, Ore.; and Barnstable County, Mass.—home to Cape Cod.

"The Palm Springs housing market is incredibly busy, with an influx of vacation-home buyers from Los Angeles and San Francisco, many of them are tech workers who can do their jobs remotely, and they enjoy the weather and lifestyle here in the desert. People don't want to vacation in a hotel room right now and many of my buyers are planning to turn their second homes into Airbnb rentals and earn some extra income when they're not in town."

Key points

1.           Second home purchases, twice the demand for them.

2.           Specifically, back in October, demand for second/vacation homes swelled 100% from a year before.

3.           This is the fourth time in less than half a year that demand saw a triple-digit increase.

4.           Low rates and the newfound freedom of telecommuting have fueled demand.

5.           Compared to demand for primary residences, second homes outpaced them by 50%.

6.           80% of the counties with the biggest spike in sales have been resort towns.

7.           High demand coupled with a low supply of inventory also means top-dollar prices.

8.           21% median increase for buyers in seasonal locations.

9.           Costs continuing to rise, the sooner they can get pre-approved and lock in a mortgage rate the better.

GARRETT FORBES   
REALTOR®

DRE #01975558 
Phone: 707.975.0896

garrett@levelupbrokerage.com 
LevelUpBrokerage.com 

By clicking 'FREE Instant Access' you are expressly consenting, in writing, to receive telemarketing and other messages, including artificial or prerecorded voices, via automated calls or texts from viewhomesinsolanocounty.com at the number you provided above. This consent is not required to purchase any good or service. More details in privacy policy and terms of use.