Economic uncertainty is taking its toll on sales in vacation destinations
Home sales in vacation destinations are declining faster than in non-seasonal markets as economic uncertainty and stricter rental regulations drive away second-home buyers, according to a new Redfin analysis.
Home sales in seasonal towns fell 3% year-over-year in July, compared to a 1% decline in non-seasonal areas. The downturn in vacation destinations has persisted since February, with sales declining consistently on an annual basis.
The analysis examined 288 seasonal towns across the US, defined as locations where more than 30% of housing stock is used only seasonally or occasionally. These markets include Aspen, CO, Bethany Beach, DE, Boca Raton, FL, and Scottsdale, AZ.
“Vacation markets are cooling faster than other places because second-home demand is sensitive to high housing costs,” said Daryl Fairweather, Redfin’s chief economist. “When mortgage rates are elevated and the cost of living is high, buyers are more likely to prioritize their primary residence over a ski chalet or beach house.”
Florida markets lead decline
Florida’s housing slowdown contributes significantly to the seasonal town downturn, with 104 of the 288 analyzed seasonal towns located in the state. Miami and Fort Lauderdale are experiencing some of the fastest declines in pending home sales among major US metro areas.
“The local condo market is brutal. We have so many people selling condos that they have been using as second homes,” said Cecilia Cordova, a Miami-based Redfin agent. She noted that buyers who purchased coastal condos in 2020 or 2021 are returning to northern cities full-time as remote work options diminish.
Rental market challenges
The short-term rental market’s reduced appeal contributes to declining vacation home demand. Tightened regulations across markets like Los Angeles have prompted many homeowners to remove listings from platforms such as Airbnb and VRBO due to regulatory complications.
“People are calling me because they have rentals they want to sell,” said Nikkolene Byron, a Palm Springs-based Redfin agent. “The rental market has slowed down, both because remote work has waned and because short-term rental regulations have strengthened.”
Inventory rises, prices flatten
Homes for sale in seasonal towns increased 17% year-over-year, compared to 14% in non-seasonal markets. Despite rising inventory, new listings in seasonal towns dropped 3% annually.
The median sale price in seasonal towns remained flat at $583,000 in July, while non-seasonal markets saw prices rise 2% to $451,000. The price stagnation reflects reduced demand from discretionary buyers and accumulated inventory.
“Prices are softening because demand for second homes is softening,” said Ann Marie Rigali, a Vail-based Redfin agent. “Most house hunters are sitting on the sidelines, waiting for mortgage rates to come down.”
What are your thoughts on the recent findings? Share your insights in the comments below.
