In Vacation Towns, Home Sales Are Falling and Prices Are Stagnating

Home sales are falling a bit faster in seasonal towns than non-seasonal towns, partly because second-home buyers are backing off amid economic uncertainty and tight short-term rental regulations. That’s causing sale prices in vacation destinations to flatten.

SEATTLE--(BUSINESS WIRE)-- The number of homes sold in seasonal towns, those where vacation demand drives the housing market, fell 3% year over year in July, according to a new report from Redfin, the real estate brokerage powered by Rocket. That’s compared to a 1% decline in non-seasonal towns.

In seasonal towns, home sales have been declining on a year-over-year basis since February.

For its report, Redfin analyzed housing-market data in seasonal towns versus non-seasonal towns, with seasonal towns defined as those where more than 30% of the housing stock is used only seasonally or occasionally. Roughly 9% of all home sales in the U.S. are in seasonal towns.

Sales are declining faster in vacation destinations because they’re often second homes or investment properties, which are typically the first to be cut when affordability is tight. While buying a home is becoming a bit more affordable in several major metros, it’s still tough for the typical American to afford a home.

A recent Redfin analysis found that mortgages for second homes in the U.S. dropped to their lowest level in at least six years in 2024. While demand for all homes fell last year, the drop was bigger for second homes than for primary residences because they’re more expensive, they’re not a necessity, and the economy is uncertain. Additionally, many Americans don’t have the freedom to work remotely from a vacation spot they may have had during the pandemic.

“Vacation markets are cooling faster than other places because second-home demand is sensitive to high housing costs,” said Daryl Fairweather, Redfin’s chief economist. “When mortgage rates are elevated and the cost of living is high, buyers are more likely to prioritize their primary residence over a ski chalet or beach house. Many Americans who might have bought a vacation home a few years ago are now holding off, partly because of high costs and economic uncertainty. And some people who already own second homes are listing them to cash out before prices soften more.”

It’s worth noting that the cooldown in Florida’s overall housing market is another factor in the seasonal town slowdown. Of the 288 seasonal towns included in this analysis, 104 of them are located in Florida. Pending home sales are falling faster in Miami and Fort Lauderdale—both seasonal towns—than any other major U.S. metro area.

“The local condo market is brutal. We have so many people selling condos that they have been using as second homes, whether it’s a part-time home for their family or a short-term rental or both,” said Cecilia Cordova, a Redfin Premier agent in Miami. “Now, some people who bought coastal condos in 2020 or 2021 are returning to New York or Boston full-time; they’re no longer working remotely from the beach. And they want to sell instead of becoming landlords because HOA fees are so high that they won’t earn as much from rent as they’ll pay in mortgage payments plus fees.”

Cordova said the silver lining is that for people who want to buy a Miami condo, it’s a great time to get a deal.

The Short-Term Rental Market Is Not As Appealing As It Once Was

Another likely reason for slowing demand in vacation towns: purchasing a home to rent it out to tourists is less appealing than it used to be.

The uncertain U.S. economy may mean short-term rentals get fewer bookings for less money. Tightened short-term rental regulations make it more time-consuming and difficult to manage a second home as a rental property; in the Los Angeles metro area, for instance, many homeowners have pulled their listings off sites like Airbnb and VRBO because of regulatory red tape.

Additionally, the vacation-rental market is saturated in some places, with heavy competition pushing down prices.

“People are calling me because they have rentals they want to sell,” said Nikkolene Byron, a Redfin Premier agent in Palm Springs, CA. “We had an influx of people coming to the desert from the coast during the pandemic, which made demand for buying second homes strong and made the rental market amazing. But now the rental market has slowed down, both because remote work has waned and because short-term rental regulations have strengthened. Some people are offloading those Airbnbs because they’re not pulling in as much income as they hoped.”

Supply of Homes For Sale in Seasonal Towns Is Up 17% Year Over Year

Inventory of homes for sale is growing in both types of markets, but vacation destinations are seeing a bigger surge. The total supply of homes for sale jumped 17% year over year in seasonal towns, compared with a 14% increase in non-seasonal towns. There are more homes for sale in vacation spots largely because sales have slowed, allowing inventory to pile up.

While total inventory is rising in vacation hotspots, fewer sellers are putting their homes on the market, with new listings in seasonal towns down 3% year over year—the biggest decline in nearly two years. That’s compared to a 2% increase in non-seasonal towns.

Byron, the Palm Springs agent, said that while a lot of people are trying to sell their second homes, some would-be sellers are staying put because it’s a buyer’s market.

Prices in Seasonal Towns Are Flat

Slow sales in seasonal towns, combined with rising inventory, are flattening home-sale prices—though the median price in seasonal towns is still over $100,000 higher than in non-seasonal places.

The median sale price in seasonal towns was $583,000 in July, unchanged from a year earlier. In non-seasonal towns, the median price came in at $451,000, up 2% year over year.

Vacation destinations are seeing prices stagnate because inventory has piled up and sales are sluggish as discretionary buyers pull back.

“Prices are softening because demand for second homes is softening,” said Ann Marie Rigali, a Redfin Premier agent in Vail, CO. “Most house hunters are sitting on the sidelines, waiting for mortgage rates to come down, and the people who are buying are looking for a deal. I met with one potential seller in Beaver Creek, and they wanted $3.3 million for a ski-in, ski-out house. That would have been a reasonable price two years ago, but this year, they could have gotten about $2.8 million. They decided against selling because they didn’t want to take the lower price.”

To view the full report, including charts, please visit: https://www.redfin.com/news/vacation-towns-home-sales-declining

About Redfin

Redfin is a technology-driven real estate company with the country's most-visited real estate brokerage website. As part of Rocket Companies (NYSE: RKT), Redfin is creating an integrated homeownership platform from search to close to make the dream of homeownership more affordable and accessible for everyone. Redfin’s clients can see homes first with on-demand tours, easily apply for a home loan with Rocket Mortgage, and save thousands in fees while working with a top local agent.

You can find more information about Redfin and get the latest housing market data and research at Redfin.com/news. For more information about Rocket Companies, visit RocketCompanies.com.

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Source: Redfin