Demand for second homes jumps in September after summer slowdown

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There’s a ‘new sense of urgency for vacation-homes’ before mortgage rates continue to rise

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According to a new report, demand for holiday homes rose 60% in September compared to pre-pandemic levels.

The recent surge in demand has been on the rise since July when there was a 40% increase in demand for second homes. However, it still hasn’t topped March’s record growth of 112%, a . According to report good From real estate brokerage Redfin.

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According to Redfin, at the start of the pandemic, when lockdown orders were in full force, consumers were jumping at the chance to leave the city life while working remotely.

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However, as cities loosen virus-related restrictions, “the initial shock of the pandemic faded, the spring home buying season ended and the overall housing market began to cool,” the real estate brokerage said.

Redfin deputy chief economist Taylor Marr noted that a rule by mortgage loan company Fannie Mae, which limited the number of second home and investment property loans, also contributed to the summer recession.

Essentially, the rule made it even harder and more expensive for homebuyers to mortgage vacation homes, according to Redfin.

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“The market may have slightly overestimated the Fannie Mae law, which explains why we’re seeing an uptick in demand for second homes,” Marr said.

Marr said that on top of rising mortgage rates “is likely to create a renewed sense of urgency for vacation-homes for homebuyers” who want to snag a second home before rates climb, Marr said. .

average rate 30 year mortgage According to Freddie Mac, it climbed to 3.09% on October 21, the highest level since April, when it stood at 3.18%.

The Fed will have to wait until 2023 to raise rates, but there is a risk of an earlier hike

Economists project what signals from the Fed and signals that inflation remains broad, setting the stage for mortgage rates to rise even higher in the coming months.

“The biggest impact is that the Federal Reserve is set to start dialing back its bond purchases as soon as next month,” said Greg McBride, Bankrate’s chief financial analyst. “However, inflation will likely be the biggest determinant of what happens to mortgage rates in the coming months. Whether they go higher, and if so, by how much.”

McBride expects long-term mortgage rates to average between 3% and 4% over the next 12 months.


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