--- title: '‘More Like a Burden Than a Good Investment’: Why Demand for Vacation Homes Is Plummeting' description: Demand for vacation homes soared early on in the pandemic. Homebuyers are less interest as mortgage rates rise and stocks fall. authors: - name: Sarah Hansen role: Senior Writer url: https://money.com/author/sarah-hansen/ bio: Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes. education: Northwestern University, New York University at_money_since: 2021 articles: 347 covers: - Housing - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://www.linkedin.com/in/sarah-m-hansen/ former_staff: true editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Housing - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2022-04-12T18:12:08.000Z' modified: '2024-01-10T13:17:36.000Z' section: Housing tags: - home prices - News word_count: 475 canonical: https://money.com/why-demand-vacation-homes-is-dropping/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We may earn a fee if you click on the links below. Compensation does not determine ranking. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo of a balcony with a beautiful mountain view](https://img.money.com/2022/04/News-Buying-Vacation-Homes-Plunging.jpg?crop=0px%2C152px%2C2880px%2C1620px&quality=85) Americans’ voracious demand for vacation homes is finally slowing down as [mortgage rates](https://money.com/current-mortgage-rates/) climb higher and higher. A new [analysis](https://www.redfin.com/news/second-home-demand-drop-march-2022/) from real estate brokerage Redfin shows that [demand for secondary homes](https://money.com/vacation-house-starter-home-trend/) — which increased dramatically early on in the pandemic — has plunged recently. Redfin uses data on [mortgage-rate lock applications](https://money.com/mortgage-rate-lock/) for secondary homes to measure demand for vacation houses. The firm’s analysis found that demand reached a peak of 88% above pre-pandemic levels in March 2021. One year later, demand has dropped sharply for two months in a row, and as of March 2022 sat at just 13% above pre-pandemic levels. The big culprit for the decline? Mortgage rates, which rose from 3.08% to 4.17% over that same year according to Freddie Mac [data](https://www.freddiemac.com/pmms/pmms30) on rates for 30-year fixed-rate mortgages. Higher mortgage rates mean higher [monthly payments](https://money.com/mortgage-calculator/) for homeowners even if house prices stayed the same — which they certainly did not. Homebuyers have been facing a [20% surge in housing prices](https://money.com/cities-home-prices-rose-20-percent/) over the past year. The two factors together mean that homeowners will end up paying more both in a down payment up front and on a monthly basis in the long run for their vacation getaway. “When rates and prices shoot up so much that a vacation home starts to look more like a burden than a good investment and a fun place to bring your family on the weekends,” Redfin Deputy Economist Taylor Marr said in a news release, “a lot of prospective buyers have second thoughts.” Marr added that new second-home loan fees, which took effect on April 1, are also driving demand for vacation homes lower. Redfin noted that the fees, which rose by between [1.125% and 3.875%,](https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Targeted-Increases-to-Enterprise-Pricing-Framework.aspx) will add about $13,500 to the cost of purchasing a $400,000 home for the typical buyer. [Home insurance](https://money.com/best-home-insurance/) on second homes is also [considerably more expensive](https://money.com/homeowners-insurance-vacation-home/) in general than properties that are lived in year-round as well. Another factor hurting demand for second homes could be the [stock market](https://money.com/stock-market-correction-january-2022/), which just wrapped up its worst quarter since the onset of the pandemic. Marr suggested that [stock market losses](https://money.com/stock-market-worst-month-january-2022/) mean that “some buyers’ down payments — and their nerves — probably took a hit.” Meanwhile, demand for primary homes has remained steady at roughly 34% of pre-pandemic levels since the summer of 2020, Redfin found. That steady demand even as prices and borrowing costs rise could be the result of hopeful buyers rushing to lock in a mortgage before rates get even higher. But experts do [expect the market to cool off](https://money.com/spring-home-buying-outlook-tips/) — eventually. [Is the Housing Market Heading for a Crash? Some Experts See Signs of a Bubble](https://money.com/housing-market-crash-signs-from-experts/) ['I Wouldn’t Freak Out Yet.' 6 Tips for Buying a House When Mortgage Rates Are Rising](https://money.com/tips-for-home-buying-mortgage-rates-rising/) [Already Stretching to Buy a Vacation Home? Insurance May Add to The Sticker Shock.](https://money.com/homeowners-insurance-vacation-home/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/why-demand-vacation-homes-is-dropping/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Housing", "item": "https://money.com/housing/" }, { "@type": "ListItem", "position": 3, "name": "Housing Market", "item": "https://money.com/housing-market/" }, { "@type": "ListItem", "position": 4, "name": "‘More Like a Burden Than a Good Investment’: Why Demand for Vacation Homes Is Plummeting" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/why-demand-vacation-homes-is-dropping/#webpage", "url": "https://money.com/why-demand-vacation-homes-is-dropping/", "name": "‘More Like a Burden Than a Good Investment’: Why Demand for Vacation Homes Is Plummeting", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2022-04-12T18:12:08.000Z", "mainEntity": { "@id": "https://money.com/why-demand-vacation-homes-is-dropping/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/why-demand-vacation-homes-is-dropping/#breadcrumb" }, "dateModified": "2024-01-10T13:17:36.000Z" }, { "@type": "NewsArticle", "headline": "‘More Like a Burden Than a Good Investment’: Why Demand for Vacation Homes Is Plummeting", "articleSection": "Housing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2022/04/News-Buying-Vacation-Homes-Plunging.jpg?crop=0px%2C152px%2C2880px%2C1620px&quality=85", "width": 1012, "height": 569, "caption": "News-Buying-Vacation-Homes-Plunging" } ], "author": [ { "@type": "Person", "name": "Sarah Hansen", "url": "https://money.com/author/sarah-hansen/", "@id": "https://money.com/author/sarah-hansen/#author", "description": "Sarah Hansen is a senior writer at Money covering all things personal finance. 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