With demand skyrocketing, stock lagging and bidding wars breaking out everywhere in the nation, house costs are naturally heading for the stratosphere. By the fourth quarter of 2020, the nationwide median house value had risen to $346,800, up from $327,400 a yr earlier, pricing many potential patrons out of the market.
On high of all this, individuals who need to make a traditional transfer — swapping one main house for one more — are competing extra with others rich sufficient to purchase second houses. The truth is, demand for second houses far surpassed demand for main houses between January 2020 and January 2021, in keeping with a Redfin evaluation of mortgage utility information from Optimum Blue, an actual property analytics agency.
The evaluation centered on requests for interest-rate locks by mortgage candidates. A charge lock freezes a pending mortgage’s charge for a short while, and is often requested when a purchase order is imminent. (Eighty % of rate-lock requests are adopted by a purchase order, in keeping with Redfin.) Whereas gross sales information don’t point out whether or not a house was bought as a main or secondary residence, rate-lock requests do, making them a great indicator of demand.
Elevated house demand predates the pandemic. Again in January 2020, charge locks for secondary houses have been 51 % larger than a yr earlier, in comparison with 33 % larger for main houses. However because the pandemic set in, the expansion in secondary-home charge locks spiked: By September 2020, rate-lock development for these houses had ballooned by 118 % yr over yr, whereas main houses had grown by a lesser, although nonetheless formidable, 65 %.
This week’s chart exhibits the adjustments in rate-lock requests on functions for main and secondary houses over the whole lot of 2020.