After years of fairly predictable sales, second home purchases started showing signs of a small but steady rise in the latter part of the 2010s. Interesting, but not remarkable — until the pandemic hit. Suddenly, the idea of owning a second home, perhaps as an escape from crowded cities, became appealing to a much broader swath of buyers, and demand surged, surged some more, and recently settled.
Does this mark the end of the second home roller coaster ride? Where do second home sales stand today? To help answer these questions, Pacaso published its Second Home Market Report in October 2021. The report looked at transaction volume, as measured by second home mortgage rate locks, and median purchase prices for the top 50 second home markets across the U.S.
Here are some key takeaways.
Second-home sales are down, but it’s all relative
Compared to summer 2020, second home sales in summer 2021 were about 27% lower. But sales had reached record highs during that first pandemic summer, with buyers seemingly desperate to flee their primary homes. Zooming out to the relative stability of the “before times,” the overall market share of second homes remains higher than pre-pandemic levels: 4.3% in summer 2021 compared to an average of 3.8% between 2017 and 2019. Second-home buyers still represent a healthy segment of the buyer pool — and it’s likely that even more second home buyers are sitting on the fence, waiting for you to help them find an affordable vacation home.
Fewer transactions, higher prices
While second home transaction volume is down, people are paying more — a lot more, in some cases. This finding probably comes as no surprise. Inventory is tight across the country, in both the primary and secondary housing markets. When supply is limited, prices tend to go up. Pacaso’s report found significant price increases from summer 2020 to summer 2021 in almost all second-home markets, with double-digit jumps in 49 of the 50 counties analyzed. The highest increase was in Kauai County, Hawaii, with a median purchase price of $1.25 million — up a whopping 83.3% from 2020. Notably, Kauai was also one of just four counties out of the 50 where transaction volume actually increased year over year.
Buyers are venturing out to new markets
With few homes available in the most popular vacation destinations, nearby markets are gaining traction. Wasatch County, Utah, is a good example. Wasatch County borders Summit County — home to Park City and its desirable ski resorts — and historically had significantly lower median home prices than its neighbor. That all changed in 2021. Perhaps due to inventory constraints in Park City, or the perception that Wasatch County was a more affordable alternative, interest and prices surged, driving the median home price in Wasatch County up 54% year over year — even higher than the median price in ritzier Summit County.
The report finds evidence of this trend in many areas, but there are still opportunities for second home buyers to find less expensive homes in up-and-coming vacation destinations that offer the same types of amenities and recreational options as their better-known neighbors. Agents can help their second home buyers by identifying these markets that meet their clients’ needs while offering a somewhat lower price point. One other option: Co-ownership, which can get buyers into second homes in top destinations for dramatically less cost, with no bidding wars, and gives them the amount of ownership they’ll actually use.
Pacaso is the modern way to buy and own a second home. We bring together buyers to purchase and collectively own a second home, and provide a fully managed, end-to-end service. We’re making second homeownership possible and enjoyable for more people.