Pacaso Second Home Market Report Q4 2021

Pacaso Second Home Market Report Q4 2021: Key takeaways

The share of second home rate locks was on the upswing at the end of 2021, after dipping mid-year from an all-time high of 5.7% in Q1 2022.
Sumter County, Florida, situated between Orlando and Tampa, saw the biggest increase in second home transactions, up 65% from last year.
Mono County, California, home to Mammoth Mountain and the gateway to Yosemite National Park, had the greatest appreciation, where the median sale price of second homes was up 83.7% YoY.

Numbers point to upswing in second home activity

The real estate market has experienced some major shifts these past two years. Midway through 2020, America’s city centers, which had previously been some of the most sought-after real estate markets in the country, suddenly took a backseat to leafy suburbs and remote getaways that offered families more space and lower prices. The second home market also saw unprecedented surges, and buying activity (measured by second home mortgage rate locks) increased by as much as 100% year over year in October 2020. Many of those trends continued throughout 2021. In fact, in the first quarter of 2021, the percentage of second home mortgage rate locks hit its highest recorded level, reaching a 5.7% share of all mortgage rate locks. In the second and third quarters, second home share decreased (to 4.6% and 4.5%, respectively) before rebounding to 5% late in the year. “In April of last year, people stopped to take a beat, to see how things would shake out in what everyone hoped would be a post-pandemic reality,” said Pacaso CEO Austin Allison. “For some, that also meant going back to the office, and perhaps not coincidentally, second home sales started to slow. But these last few months, many employers finally decided to make remote work more permanent. This seems to have spurred renewed interest in second home ownership.”

Line chart of second home mortgage locks

Regional trends for Q4 2021: Big gains in ‘Off-Broadway’ markets

Transaction growth: Central and North Florida

Sumter County, Florida, nestled inland between Orlando and Tampa, saw the largest increase in second home rate lock transactions, with a 65% year-over-year increase. Pacaso analysis revealed that last quarter, the markets with the largest year-over-year increases in second home mortgage rate locks were located in the Southeastern U.S.“For the past year, we’ve been tracking up-and-coming second home hot spots,” said Allison. “And actually, Sumter is a perfect example of the kinds of locations we call ‘vacation-destination-adjacent’ that have been catching our eye. If established second home destinations are like Broadway, these emerging nearby destinations are like Off-Broadway, and their moment in the limelight – or the sunshine – is coming.”St. John’s County in Florida also saw an increase in second home transactions, with second home mortgage rate locks up 9.7% year over year. One of the county’s notable cities is St. Augustine, located just south of Jacksonville and north of Daytona Beach. St. Augustine is known for being the nation’s oldest city, and is often referred to as The Ancient City because of its historical landmarks and cobblestone streets that date back to the late 1500s.

Price growth: Eastern California

43 of the 50 counties tracked in Pacaso’s latest report saw double-digit price growth in second home prices. Mono County, California, which borders Yosemite National Park, topped the charts in terms of price growth, with a median purchase price of $790K, up an astonishing 83.7% compared to a year ago. That increase is likely driven by the confluence of several factors, including the area’s extraordinary endowment of natural beauty, its relative proximity to expensive West Coast population centers, and limited new construction. The latter is in stark contrast to some other second home hot spots, like those in Florida, which have seen more significant development.

Price drops: New Jersey

Atlantic County, New Jersey, home to Atlantic City, saw the biggest annual declines in second home median sale prices, down 14%. New Jersey has been particularly susceptible to foreclosures, and according to Attom data, New Jersey counties had the third-highest amount of foreclosures in the country in Q4 (1 in every 1,288 units). Download the full data set here.

Methodology

Pacaso identified the nation’s top second home markets by compiling census data on counties with a percentage of seasonal homes and median home values at or above the top 20th percentile and by excluding those below the bottom 10th percentile of counties with the fewest households. Counties without at least 20 second home transactions in the period were also excluded from the analysis.Pacaso then analyzed real estate activity in the top second home markets by observing mortgage rate lock data, a leading indicator of second home buying activity. When applying for a mortgage rate lock, a home buyer must specify whether they are securing a mortgage rate for a primary home, secondary home or an investment property. Approximately 80% of mortgage rate locks result in home purchases. Mortgage rate lock data was provided by real estate analytics firm Optimal Blue and includes a sizable share of the market that is taken to be representative of the whole. Second home rate lock transactions and median purchase price data were sourced at the county level and aggregated quarterly, with Q4 representing the months of October through December 2021.

Second home prices see unprecedented surges in Q4 2021