In the early days of the pandemic, droves of affluent homeowners escaped to secluded secondary homes as the hustle-and-bustle of urban life came to a halt. As the nation prepares for a new lockdown in the face of soaring infection rates, another wave of homeowners is accelerating their search for a wintertime haven.
The demand for second homes has risen 100 percent year over year — the fourth consecutive month of such gains, according to a new Redfin report released Thursday. Meanwhile, the annual demand for primary homes has risen by an equally impressive, yet lesser, 50 percent.
Redfin measured demand based on Optimal Blue’s mortgage-rate lock data, which tracks the number of agreements between homeowners and lenders to secure a mortgage rate. For each agreement, Redfin explained, homeowners must specify if the mortgage is for a primary or secondary home.
Redfin lead economist Taylor Marr said the boost in mortgage-rate lock agreements for secondary homes results from continuing historically-low interest rates and remote working conditions that eliminate the need to live in a metro.
“With mortgage rates at all-time lows and offices shut down across the country, the dream of having a second home outside of the city is becoming a reality for many wealthy Americans,” he said. “Unfortunately, at the same time, millions of less-fortunate families are behind on their mortgage or rent payments due to financial hardship brought on by the coronavirus pandemic.”
Lake Tahoe, Cape Cod, Palm Springs, the Jersey Shore, and Bend, Ore. have benefitted the most from the increase in demand for second homes, the report explained. Alongside an annual home sales increase of up to 80 percent, median prices in these and similar markets have risen 21 percent year-over-year to $420,000 — well above the national median existing-home price of $313,000.
In a phone call with Inman, Oyster Real Estate agent Ginny Guimond echoed Redfin’s findings and said Cape Cod’s sales demand is the highest its ever been.
“I have people from New Orleans who placed an offer on a property on Sunday, sight unseen,” she said. “People are buying sight-unseen, we’re showing them photos, and we’re doing our best with floor plans, with videos and video walkthroughs.”
“I’ve got somebody coming [to Cape Cod] who’s selling her property in Hawaii, and she just took an offer yesterday,” she added. “She’ll be in Cape Cod, and she’ll be [using Zoom] to connect with her employer in Hawaii.”
Guimond said second-home buyers have snapped up most of the inventory at the $500,000 range, which has pushed buyers to either expand their budget, choose fixer-uppers, or buy land to build a new home.
“We don’t have enough inventory,” she said. “The interest rates went down again this week for loans, and the people that want to sell don’t have any place to go.”
“But we’re really trucking,” she added. “Houses that sat on the market, in two cases, since 2005 are gone. They sold. It’s just incredible.”
As a result of the boost in demand, Guimond said bidding wars abound as sellers give buyers a three-day offer window before choosing the “best and final offer.” Although the bidding wars have been concentrated at the lower end, she said they’re slowly making their way to homes at the market’s upper level.
“They want to come here because there’s more to do outside, [they like] the ability to be outside longer into the [fall] season,” she said. “I think these buyers will make Cape Cod their primary place; we have excellent schools in Cape Cod, and there’s no pressure to leave Cape Cod come August.”
“People aren’t going back to the cities, and the offices in the cities are scaling down as they see their employees are just as productive at home,” she added. “I think that no matter what [job] you do, there’s an opportunity to work from home. It’s amazing.”
Meanwhile, in Bend, Bend Premier Real Estate Principal Broker Lynnea Miller said she hasn’t necessarily seen a rise in demand for second homes. However, she said homebuyers are ditching their urban abodes altogether to live in Bend.
“In our market, we have hardly any inventory right now. Everything has been snapped up,” she said. “It’s hard to say that everything that has typically been a second home is not now a primary home.”
“For instance, we have a number of properties that we’ve represented in traditionally resort, condominiums and things like that that are usually used as vacation rentals and investment properties, where people are moving into them to stay,” she added. “The demand to live in central Oregon is so high, and people are moving here in droves.”
Miller said Bend has earned the moniker “Zoomtown” as droves of buyers fulfill their dream of staying in the city year-round. As a result, Bend’s inventory has declined from three months of supply to 12 days of supply.
“Although we’ve had more listings, we have far more pendings,” she said. “Everything on the market gets snapped up if it even gets to that point.”
“We have a ‘coming to’ category on our MLS, and a lot of those properties are sold,” she added. “In our office, we have 16 buyers making offers on one property. That tells you the demand is here. People are making what would be a secondary home a primary home.”
As a result, Miller said the average listing price for single-family homes has risen 11.4 percent year-over-year to $638,000. Likewise, the median sales price has ballooned 19.1 percent year-over-year to $560,000.
“New listings were up in October 18 percent, but pendings were up 113 percent,” she said. “That tells you we’re operating on a net loss.”
Miller said the rush to second-home markets isn’t going to end with COVID, as the pandemic has pushed Americans to rethink their homebuying priorities.
“COVID has really made people rethink and reevaluate what they want to do and where they want to be,” she said. “If they’re going to be stuck at home and they can have internet use to get their work done, they want to come to a place like Bend, which has always been a mecca for lifestyle.”
“People want to love where they live,” she added.