Although the pandemic has led to financial obstacles for many Americans, you would never know it in the second-home real estate market. A recent analysis of Optimal Blue data revealed that there was an 84% year-to-year growth in second-home loans. In fact, this figure is down a bit from a peak 118% year-over-year increase in September, but it’s the eighth straight month of 80%-plus year-over-year growth in the second-home market.
The annual rise in second-home applications is more than double the increase in applications for primary homes. Demand for primary residences rose 36% year-over-year in January, down from a 65% peak in September. It’s the smallest increase since May for primary home mortgage applications.
Why the increase in second-home purchases?
The Optimal Blue data does not analyze why we are seeing this uptick in second-home purchases. With this said, the most likely driver in this market would be the ability for many Americans to work remotely during the pandemic. In particular, more affluent Americans will depart highly congested big cities to spend more time in vacation destinations such as South Florida. With more and more companies opting to offer remote working capabilities moving forward, we do not see this demand going away anytime soon. Of course, a good number of Americans are also opting to relocate their primary residence to these same vacation destinations as well.
All signs indicate that the remote working environment is here to stay for many Americans even after we reach herd immunity with COVID-19. With this said, we see destinations such as South Florida continuing to be in high demand. While this trend is being seen significantly more with high income Americans, those in the service industries are being hit the hardest by the pandemic. Obviously, remote working environments do not apply to those in various service industries.
However, the silver lining for all Americans is that mortgage rates continue to hold at historic lows. Therefore, buying power has increased tremendously for lower wage earners just as well. If you are considering either a permanent relocation to South Florida or simply a second-home, we can help. Contact Live South Florida Realty, Inc. today!