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Demand for Vacation Homes Decreases

Second-home mortgage demand declined in Florida in 2024. Rising costs and changing preferences led to more activity from local buyers already in the market.

SEATTLE — U.S. homebuyers took out 86,604 mortgages for second homes in 2024, the lowest level in records dating back to 2018 and down 5% from a year earlier, according to a new report from Redfin.

This is according to a Redfin analysis of Home Mortgage Disclosure Act (HMDA) data covering purchases of second homes, primary homes and investment properties from 2018 to 2024. The term “vacation home” is used interchangeably with “second home” in Redfin’s report.

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Analysis from Florida Realtors® economists

Why does mortgage demand for second or vacation homes matter to Realtors® in Florida?

Knowing who and what they are buying matters most for prospecting clients and making a strategy for the coming year. Overall, existing home and condo sales are down in Florida and have been that way since 2023. Inventory has been steadily increasing over the last year or so, potentially paving the way for sideline buyers to get into the game, if they are able to tolerate persistently higher prices and mortgage rates.

Sellers are slowly accepting the necessity of price reductions or concessions to make deals work. Still, prices remain higher than pre-pandemic, albeit appreciation has slowed in some markets and is showing slight year-over-year declines.

For Realtors looking where to focus their business efforts this year, this data supports the strategy of concentrating mainly on repeat local buyers and sellers, who consistently are the ones who are transacting the most today. First-time buyers continue to struggle to get into the game this year, unless they come with alternative sources of funds for their down payment (relatives or proceeds from stock or crypto sales). People looking for second homes are also on the list, particularly in the main Florida markets.

Property insurance and potentially special assessment costs are challenging buyers' appetites for a second home, as well as a continued march toward in-person employment. Economic uncertainty also weighs on the desire for multiple properties. Checking in with people you've worked with before may be a good way to build out your work for the remainder of the year. Looking for leads for out-of-state or international buyers may not pay off as much. A potential thread to pull may be those who recently bought in Florida and are looking to exit.

Note that the data are only on mortgages, which selects for those who choose to finance their purchase of a second home. We know that many who can purchase in cash and bypass the impact of high interest rates decide to do so. Cash sales consistently make up nearly 50% of all Miami-Fort Lauderdale – West Palm Beach MSA sales. So, while demand for mortgages on second homes has indeed declined in Florida, we do not know how much of that demand is still present; instead, it is shifting toward cash.

While mortgages for second homes dipped to a six-year low in 2024, the rate of decline slowed substantially from the two years prior. In 2022, second-home mortgages fell 42% year over year, and in 2023, they fell 40%. The big declines in 2022 and 2023 were due largely to the vacation-home boom in 2020 and 2021, which was driven by affluent Americans taking advantage of low mortgage rates and remote work to decamp to vacation destinations.

Second-home mortgages made up just 2.6% of all mortgages in 2024—the lowest share on record. That’s down from 2.8% the year before and a peak of 5% in 2020.

Demand for all home types was slow in 2024 because it was the second-least affordable year for homebuying on record, due to high home prices and mortgage rates. But demand for second homes fell more than demand for primary homes; mortgages for primary homes fell 1.4% year over year, less than half the decline in mortgages for second homes.

There are several reasons mortgages for second homes are falling faster:

  • Second homes are more expensive. The median value for second homes nationwide was $495,000 in 2024, compared to $385,000 for primary homes. Plus, loan fees for second homes increased in 2022, raising the total cost of buying one.
  • Vacation homes aren’t a necessity. Inflation drove up the price of nearly everything in 2024, prompting many Americans to cut back on unnecessary expenses. When housing costs skyrocket and the market cools, people back off second homes faster.
  • The rental market has cooled. Purchasing a second home to rent it out is less appealing than it used to be because asking rents are no longer growing, and the short-term rental market has cooled from its peak.
  • In-office work. Many workers have less time to spend in a vacation home than they did during the pandemic because employers have asked workers to return to the office.

“Most people aren’t buying vacation homes at all because mortgage rates and insurance costs – especially for waterfront homes and condos–have skyrocketed. Plus, people know they’re unlikely to earn much revenue from listing on Airbnb now that occupancy rates are down,” said Lindsay Garcia, a Redfin Premier agent in Fort Lauderdale, FL. “While some wealthy cash buyers are still purchasing second homes, they are much more likely to make a low-ball offer or request concessions than they used to be.”

Demand for vacation homes in Florida

In Miami, second-home mortgage originations dropped 32.2% year over year in 2024, more than any other major U.S. metro. It’s followed by four other Florida metros: Orlando (-28.4%), Fort Lauderdale (-28%), West Palm Beach (-23.7%) and Tampa (-20.9%).

Demand for second homes is falling fastest in Florida because it’s less appealing for out-of-towners to own homes there than it once was. Housing costs in the Sunshine State are soaring, partly due to increasing insurance, HOA and property-tax costs. Additionally, the increasing frequency and intensity of natural disasters is turning some people off from the state. And both of those things together are making some would-be second-home buyers shy away from Florida because they’re nervous home values will fall.

While vacation-home mortgages are declining in Florida, they’re still more common in West Palm Beach than anywhere else. In West Palm Beach, second-home mortgages made up 5.6% of all mortgages in 2024, the highest share of the metros in Redfin’s analysis, followed by New Brunswick, NJ (4.2%) and Riverside (Palm Springs), CA (3.5%).

Mortgages for second homes fell year over year in 30 of the 50 most populous U.S. metros, stayed flat in two, and rose in the others. They increased most in Detroit (up 26% year over year), San Francisco (17%) and San Jose, CA (15.9%). But note that second-home mortgages still made up a very small portion of all mortgages in those metros: Less than 1% in Detroit and San Jose, and 1.7% in San Francisco.

The people who are buying vacation homes: Rich, middle-aged, white

Redfin also took a look at who bought vacation homes in 2024, breaking down the data by income level, age and race:

High earners: Nearly nine in 10 (86.4%) second-home mortgages issued in 2024 went to high-income buyers. Less than 1 in 10 (7.5%) went to middle-income buyers, and 2.7% went to low-income buyers. The median household income for the high-income category is $280,000, and it’s $96,000 for middle-income and $64,000 for low-income. All of those income groups took out fewer second-home mortgages in 2024 than the year before.

Gen Xers: 30.2% of second-home mortgages went to 55-64 year olds in 2024, and another 28.4% went to 45-54 year olds. Next came 35-44 year olds, who made up 20% of vacation-home mortgage originations, followed by 35-44 year olds (20%) and 65-74 year olds (12.5%). But while Gen Xers took out the lion’s share of vacation-home mortgages, they took out fewer than they did the year before.

Baby boomers were the only generation that took out more vacation-home mortgages in 2024 than the year before (up 4.5% for 65-74 year olds; up 8.6% for 74+).

White people: 4 in 5 (79.7%) second-home mortgages went to white homebuyers in 2024, dramatically outpacing the share for Asian (6.4%), Hispanic (6%) and Black (2.6%) homebuyers. All races in Redfin’s analysis took out fewer second-home mortgages in 2024 than the year before.

Source: Redfin

© 2025 Florida Realtors®

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