Only a fraction of buyers are taking out vacation-home loans as market conditions tighten
Americans are purchasing just a third as many vacation homes as they were during the pandemic-era boom, as high prices, rising rates, and changing work patterns take their toll.
A new report from Redfin reveals that US homebuyers took out 86,604 mortgages for second homes in 2024, marking the lowest annual total since at least 2018. That figure is down 5% from 2023, and second-home loans accounted for only 2.6% of all mortgages last year, a record low share.
This downturn follows two years of sharp double-digit declines, with second-home mortgages falling 42% in 2022 and 40% in 2023. Those earlier drops largely reflected a correction after the explosive demand seen in 2020 and 2021, when remote work and ultra-low mortgage rates fueled a rush into vacation destinations.
“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.
Redfin’s analysis of federal mortgage data shows that high-income borrowers, those with a median household income around $280,000, accounted for 86.4% of all second-home mortgages in 2024. Middle-income borrowers represented just 7.5%, and low-income borrowers only 2.7%.
Buyers aged 45 to 64 were responsible for nearly 60% of vacation home mortgages, with Gen X taking the lion’s share. However, older baby boomers were the only generation to increase their vacation-home borrowing year over year, with mortgage originations up 4.5% among 65- to 74-year-olds and 8.6% among those aged 74 and above.
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Racial disparities were also clear. White borrowers made up nearly 80% of all vacation-home mortgage recipients in 2024. In contrast, Asian borrowers accounted for 6.4%, Hispanic borrowers 6%, and Black borrowers just 2.6%. All racial groups took out fewer second-home mortgages than they did in 2023.
Interestingly, the broader luxury segment is still seeing signs of life. Realtor.com and global real estate firm Knight Frank reported a 30% year-over-year surge in the sale of ultra-luxury properties valued at over $10 million, totaling 558 global transactions in 2024.
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