Demand for second homes fell for the second straight year, according to a recent analysis by Redfin. U.S. homebuyers took out 90,772 mortgages for second homes in 2023, marking a 40% decline from the previous year and a staggering 65% drop from the peak of the pandemic housing boom in 2021.
Primary vs. Secondary: While mortgages for primary homes were also down, they saw a less drastic decline—20% year-over-year in 2023 and 35% from 2021.
- Cost Comparison: The typical second home was valued at $475,000 in 2023, compared to $375,000 for a primary residence.
- Additional Costs: The federal government increased loan fees for second homes in 2022, further raising the total cost of purchasing one.
Regional Impact: Mortgage originations for second homes fell across all major U.S. metros, with some areas experiencing particularly steep declines.
- Austin, TX: Saw the largest drop, with second home sales plummeting 62.5% in 2023.
- San Francisco: Recorded a 57.6% decline.
- New York: Experienced a 53.9% drop.
- Seattle: Fell by 53%.
- Nashville, TN: Decreased by 51.3%.
Looking Ahead: The downturn in second home purchases shows no signs of reversing in the near future, with early data from 2024 indicating that demand remains sluggish.
