“Most people aren’t buying vacation homes at all because mortgage rates and insurance costs–especially for waterfront homes and condos–have skyrocketed,” Lindsay Garcia, a Redfin Premier agent based in Fort Lauderdale, said in the report. “Plus, people know they’re unlikely to earn much revenue from listing on Airbnb now that occupancy rates are down.”
Demand for all home types was sluggish in 2024, which Redfin identified as the second-least affordable year for homebuying on record. But vacation home demand fell more sharply than that for primary residences, with primary home mortgages declining just 1.4% year over year.
The decline reflects multiple headwinds. Vacation homes are significantly more expensive than primary homes, with a median value of $495,000 in 2024 compared to $385,000 for a primary residence.
Financing costs have also risen due to higher interest rates and fee increases introduced in 2022 for second-home loans. At the same time, inflation has made many Americans more cautious about discretionary purchases, and the cooling of the rental market, both long-term and short-term, has made second homes less attractive as investment properties.
Who’s still buying vacation homes?
Despite the overall slowdown, second-home buyers remain concentrated among a narrow demographic: wealthy, white, middle-aged Americans.