The mid-pandemic work-from-home movement sparked a Great Migration for prospective homebuyers across the U.S., and second-home hotspots were subsequently hit with record-high demand. Rental and home sales prices increased by more than 25% year-over-year in April in the top five Sun Belt hotspots: Phoenix, Cape Coral, FL, Naples, FL and Las Vegas. But according to Redfin, the second-home boom may be coming to an end.
Buyers who relocated to vacation destinations during the pandemic were backed by historically low mortgage rates, but as the Fed sends interest rates soaring to control runaway inflation, current buyers are finding a complete absence of affordability, and Sun Belt locals are hurting the most.
“The popularity of vacation towns has sent housing costs through the roof, making it harder for many locals to afford living in their hometowns,” said Redfin Deputy Chief Economist Taylor Marr. “The second-home boom is ending as many vacation-home buyers are priced out of the market due to historically high prices and high mortgage rates–but those same factors have already pushed locals to the sidelines. Locals in popular beach towns and vacation spots have spent the last two years competing for a limited number of homes with wealthy second-home seekers–and often losing.”
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