Thanks to low mortgage rates and remote work flexibility, demand for second homes surged in mid-2020 and remained high throughout 2021 with a 77% increase from pre-pandemic levels in December, Forbes reports. More buyers took advantage of mortgage-rate locks during the pandemic to protect against impending interest rate hikes, and as a result, many were able to purchase second homes.
As many Americans make the transition to remote work permanent, demand for second homes is likely to remain high, though seasonal patterns could affect home purchases and cause a slight slowdown into the start of 2022.
The popularity of second homes skyrocketed in mid-2020 as affluent Americans flocked to suburbs and less populated areas, taking advantage of low mortgage rates and remote work. The slight slowdown in mortgage-rate locks from November to December is likely an effect of the holiday season and not indicative of dampening demand.
A mortgage-rate lock is an agreement between a home buyer and a lender that allows the buyer to lock in an interest rate on a mortgage for a certain amount of time, offering protection against future interest rate hikes. Buyers must specify whether they are applying to secure a mortgage rate for a primary home, a second home or an investment property. Roughly 80% of mortgage-rate locks result in actual home purchases.