With demand skyrocketing across the country, inventory lagging, and bidding wars erupting, property prices naturally move towards the stratosphere. By the fourth quarter of 2020, the national average price for home rentals had risen from $ 327,400 a year ago to $ 346,800, excluding many potential buyers from the market.
In addition, people who want to take a conventional move – swap one primary home for another – compete more with others rich enough to buy a second home. According to a Redfin analysis of mortgage application data from Optimal Blue, a real estate analysis firm, demand for second homes far outpaced demand for primary homes between January 2020 and January 2021.
The analysis focused on requests from mortgage applicants for interest freezes. An interest rate lock freezes the interest rate on an outstanding loan for a short period of time and is usually requested when a purchase is imminent. (Eighty percent of tariff lock requests are followed by a purchase, according to Redfin.) While sales records don't state whether a home was purchased as a primary or secondary residence, tariff lock requests are what makes them a good indicator of demand.
The increased demand for home ownership precedes the pandemic. In January 2020, the interest freezes for second homes were 51 percent higher than a year earlier, compared with 33 percent for primary homes. But as the pandemic set in, the growth in interest rate locks on second homes accelerated: by September 2020, the growth in interest locks on these homes had increased 118 percent year over year, while primary homes had increased less, albeit still substantial. 65 percent.
This week's graph shows the changes in tariff lock requirements for applications for primary and secondary housing throughout 2020.
