Vacation Home Mortgage Decline: What You Need to Know

vacation home mortgage

The vacation home mortgage market has witnessed a notable decline in 2023. With changing economic conditions and shifts in buyer preferences, the dynamics of purchasing second homes have transformed. This article dives into why the market for vacation home mortgages is slowing down, and what potential buyers should consider.

vacation home mortgage
Planning to buy a vacation home? Learn about the current vacation home mortgage trends and make informed decisions. | Canva

Understanding the Decline in Vacation Home Mortgage Demand

Economic factors play a significant role in the recent downturn in vacation home mortgages. Rising interest rates and economic uncertainty have made buyers more cautious. For example, as lending rates climb, the cost of borrowing increases, making it less attractive to finance a second home. This trend is coupled with a general tightening of credit conditions, which adds another layer of complexity for potential buyers.

decline in vacation home mortgage
Data from Redfin

Impact on Potential Buyers

If you’re considering buying a vacation home, it’s essential to understand how these market conditions affect your purchasing power. Buyers now face higher monthly repayments and more stringent lending criteria, which may necessitate a larger down payment or settling for a less expensive property. It’s advisable to assess your financial stability and consult with mortgage professionals to get a clear picture of what you can afford in the current market.

vacation home mortgage
Canva

Market Outlook

Despite the current slowdown, the long-term outlook for vacation homes could see a rebound. Market analysts suggest that as economic conditions stabilize, interest in vacation homes may gradually return. Prospective buyers should stay informed about market trends and be ready to act when conditions are favorable, potentially securing a valuable investment.

Metro-level summary: Mortgages for second homes, 2023 

See Also
Best markets for home buying_ Grand Rapids, Michigan (2)

50 most populous U.S. metros

U.S. metro area  Second-home mortgage originations Second-home mortgage originations, YoY change Share of total mortgage originations that were for second homes Median value of second homes
Anaheim, CA 444 -36.7% 2.9% $1,335,000
Atlanta, GA 734 -45.2% 1.0% $435,000
Austin, TX 388 -62.5% 1.1% $495,000
Baltimore, MD 222 -45.6% 0.8% $515,000
Boston, MA 428 -43.9% 1.2% $805,000
Charlotte, NC 454 -42.5% 1.2% $445,000
Chicago, IL 448 -48.4% 0.7% $365,000
Cincinnati, OH 181 -41.8% 0.7% $325,000
Cleveland, OH 119 -39.3% 0.6% $225,000
Columbus, OH 212 -41.3% 0.9% $420,000
Dallas, TX 447 -45.9% 0.6% $485,000
Denver, CO 514 -36.2% 1.3% $675,000
Detroit, MI 73 -32.4% 0.5% $245,000
Fort Lauderdale, FL 679 -47.0% 3.5% $445,000
Fort Worth, TX 215 -45.6% 0.7% $435,000
Houston, TX 1114 -47.5% 1.4% $405,000
Indianapolis, IN 254 -32.4% 0.9% $325,000
Jacksonville, FL 680 -43.7% 2.7% $475,000
Kansas City, MO 206 -31.1% 0.8% $335,000
Las Vegas, NV 877 -49.6% 3.1% $455,000
Los Angeles, CA 512 -51.1% 1.3% $1,305,000
Miami, FL 602 -46.2% 3.1% $715,000
Milwaukee, WI 145 -45.7% 1.0% $355,000
Minneapolis, MN 393 -38.1% 0.9% $420,000
Montgomery County, PA 91 -32.1% 0.5% $510,000
Nashville, TN 394 -51.3% 1.4% $510,000
Nassau County, NY 600 -43.6% 2.8% $1,725,000
New Brunswick, NJ 858 -45.4% 3.9% $885,000
New York, NY 865 -53.9% 1.8% $985,000
Newark, NJ 280 -37.5% 1.6% $375,000
Oakland, CA 99 -50.5% 0.5% $995,000
Orlando, FL 1483 -36.9% 4.1% $445,000
Philadelphia, PA 124 -50.2% 0.7% $355,000
Phoenix, AZ 2001 -46.5% 3.2% $535,000
Pittsburgh, PA 181 -38.2% 0.9% $285,000
Portland, OR 258 -50.0% 1.1% $605,000
Providence, RI 363 -31.1% 2.7% $775,000
Riverside, CA 1566 -47.1% 4.0% $655,000
Sacramento, CA 455 -48.8% 2.1% $805,000
San Antonio, TX 438 -51.1% 1.3% $335,000
San Diego, CA 411 -45.4% 2.1% $1,115,000
San Francisco, CA 112 -57.6% 1.6% $1,355,000
San Jose, CA 69 -35.5% 0.7% $1,300,000
Seattle, WA 239 -53.0% 0.8% $795,000
St. Louis, MO 303 -25.2% 0.9% $315,000
Tampa, FL 1618 -41.5% 3.6% $425,000
Virginia Beach, VA 415 -47.5% 1.8% $525,000
Warren, MI 281 -32.1% 1.0% $325,000
Washington, DC 436 -46.1% 0.9% $655,000
West Palm Beach, FL 1081 -37.0% 6.6% $635,000

Data from Redfin

The decline in the vacation home mortgage market reflects broader economic shifts and changes in consumer behavior. By staying informed and cautiously planning, potential buyers can navigate these turbulent times effectively.