The vacation home sector keeps on pushing higher.
What’s hotter than hot?
One answer could be found in Southwest Florida, where two markets, Naples and Cape Coral, are among the top five nationally in price increases for second homes — both in rent and for sale. Those markets, according to a report from Seattle tech real estate brokerage Redfin, join Phoenix, Myrtle Beach and Las Vegas in the top five.
Prices began growing faster in second-home destinations at the end of 2020. That happened, the report states, “soon after demand for second homes skyrocketed as affluent Americans took advantage of pandemic-fueled remote work to decamp to vacation destinations and escape crowded cities.” Mortgage-rate locks for second homes spiked in June 2020, the report found, and remained elevated through the beginning of 2022, reaching a peak of 88% above pre-pandemic levels in March 2021.
In Cape Coral and Naples, year-over-year second-home rental prices grew 41% and 37.7% in April, respectively, while sale prices rose 38.2% and 37.6%. Mortgage applications for second homes rose dramatically, too: In Cape Coral applications increased 59% from 2018-2019 to 2020-2021, the report found. Applications increased 75% in Naples over the same time frame.
The Redfin report analyzed second-home mortgage origination data from the Home Mortgage Disclosure Act from 2018 through 2021. The housing market data comes from the MLS and the rental market data comes from RentPath.
“The popularity of vacation towns has sent housing costs through the roof, making it harder for many locals to afford living in their hometowns,” Redfin Deputy Chief Economist Taylor Marr says in the report. “The second-home boom is ending as many vacation-home buyers are priced out of the market due to historically high prices and high mortgage rates — but those same factors have already pushed locals to the sidelines. Locals in popular beach towns and vacation spots have spent the last two years competing for a limited number of homes with wealthy second-home seekers — and often losing.”