The Vacation Home Frenzy is Fading

April 11, 2023

THE BIG SPLASH

The Vacation Home Frenzy is Fading

The demand for vacation homes has fallen significantly compared to pre-pandemic levels, according to a new report from real estate brokerage Redfin.

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  • Mortgage-rate locks for second homes dropped 52% on a seasonally adjusted basis in March compared to pre-pandemic levels, while the number of people locking in mortgages for second homes fell to the lowest level since 2016 in February.

  • Hannah Jones, an economic data analyst at Realtor dot com, attributes the decrease to the fact that vacation homes no longer provide the same benefits they did a few years ago.

  • During the pandemic, the demand for vacation homes skyrocketed, as buyers could take advantage of low mortgage rates, travel restrictions, and remote work. However, now with elevated mortgage rates, high home prices, and persistent inflation, buyers are holding back from taking the plunge.

  • Interest in second homes started to decline in March 2022 as mortgage rates began to rise. Redfin's deputy chief economist, Taylor Marr, said that with housing payments near their all-time high, it's a challenging time for most Americans to buy a vacation home.

A SCOOP OF BUYING POWER

This LA Couple Thinks Owning a Home is as Likely as Owning a Spaceship

A professor of public policy and his partner, who make a combined income of over $200,000 per year, have said they find the idea of buying a home in Los Angeles hilarious due to the high costs of housing.

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  • Stan Oklobdzija, a visiting assistant professor at UC Riverside, and his partner, Sarah Boyd, rent a one-bedroom condo in Little Tokyo for $2,400 per month. While they are high earners, many people in the city earn far less than them, making it almost impossible for them to afford a home.

  • According to the US Census Bureau, the median household income in Los Angeles is $69,778, with those in the 95th percentile earning almost $243,000. However, the average value of a home in the city is $891,820, which is more than double the US average.

  • Oklobdzija blames structural barriers for the inability of millennials to own homes, including restrictions on development and zoning laws. He argues that land use is set by local elected officials who prioritize what will get them re-elected, rather than what is best for their communities.

A SCOOP OF LISTING

UK House Listed for $408K, With No Floors

A house in the UK is making headlines for its unique feature - it's being sold without any floors on the ground and second levels. The four-bedroom property, located in Corby, Northamptonshire, is listed for $408,000 and boasts decently sized bedrooms, two ground-floor bathrooms, and exposed brickwork and fireplaces.

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  • However, potential buyers should note that the front door is boarded up and the backyard is overgrown.

  • The property also requires a full refurbishment, and cash-only buyers can apply.

  • Despite these issues, the home has great potential, with planning permission already granted for an extension, and a large garden that could be used for further parking.

  • While it may not be move-in ready, the property description suggests that restoring the home to its former glory would be a rare opportunity. Interested buyers should be prepared to invest in flooring in order to fully enjoy the home's amenities.

A SCOOP OF METAVERSE

Virtual Real Estate is Not Looking Good

The metaverse's virtual real estate market is in trouble. Decentraland, a platform for buying and selling virtual land, is struggling as revenues have dropped significantly over the past year.

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  • Currently, only between 20 and 30 people are trading property on a weekly basis, compared to millions in late 2021 and early 2022.

  • Decentraland's troubles come as the interest in owning virtual real estate has also decreased. Last year, DappRadar found that Decentraland only had 38 active users over 24 hours.

  • In addition, the platform has struggled to draw in serious numbers of users, with one user describing it as "a bad video game made up of smaller, worse video games wrapped in real-estate scheme cosplaying as The Matrix".

  • The metaverse's virtual real estate market is on a decline, and Decentraland's current struggles suggest it may not be able to stay afloat for long.

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