The Cooling Vacation Home Market: Americans Retreat from Second Home Purchases in 2024

Vacation Home Purchases Hit Rock Bottom as Economic Realities Shift

The American dream of owning a vacation getaway has hit a significant roadblock. Recent data reveals that Americans are securing mortgages for only one-third as many vacation properties as they did during the pandemic-fueled buying frenzy. In 2024, homebuyers obtained just 86,604 mortgages for second homes—marking the lowest level in records dating back to 2018 and representing a 5% decrease from the previous year's figures.

The dramatic decline reflects a perfect storm of economic and lifestyle factors. Skyrocketing property prices, persistently high mortgage rates, and the widespread corporate push for employees to return to physical offices have collectively diminished the allure of owning a second residence. These market conditions have particularly affected vacation destinations that experienced unprecedented growth during the pandemic.

Second-home mortgages now constitute a mere 2.6% of all mortgage originations—the smallest proportion on record and a significant drop from the 5% peak observed in 2020 when remote work possibilities sparked a mass exodus to vacation hotspots.

The Economics Behind the Vacation Home Decline

While 2024 ranked as the second-least affordable year for residential property purchases across all categories, vacation properties experienced a steeper decline compared to primary residences. While mortgages for primary homes decreased by just 1.4% year-over-year, second-home mortgages fell at more than double that rate.

Several key factors are driving this pronounced disparity:

1. Premium Price Points: The median value for vacation properties nationwide reached $495,000 in 2024, substantially exceeding the $385,000 median for primary residences. This price differential, coupled with increased loan fees specifically for second homes implemented in 2022, has placed such purchases beyond reach for many potential buyers.

2. Discretionary Nature: Unlike primary housing, vacation properties fall firmly in the category of luxury rather than necessity. With inflation driving up costs across virtually all consumer goods and services, many Americans have prioritized essential expenses over discretionary purchases like second homes.

3. Cooling Rental Economics: The financial justification for vacation property investment has weakened significantly as both traditional and short-term rental markets have stalled. With rental rates plateauing and Airbnb occupancy rates declining, the investment case for second homes has become less compelling.

4. Return-to-Office Mandates: The pandemic-era flexibility that allowed remote workers to spend extended periods at vacation properties has diminished substantially with employers increasingly requiring in-person attendance, reducing the practical utility of second homes.

As Lindsay Garcia, a Redfin Premier agent in Fort Lauderdale, observed: "Most people aren't buying vacation homes at all because mortgage rates and insurance costs—especially for waterfront homes and condos—have skyrocketed. Plus, people know they're unlikely to earn much revenue from listing on Airbnb now that occupancy rates are down. While some wealthy cash buyers are still purchasing second homes, they are much more likely to make a low-ball offer or request concessions than they used to be."

Florida's Dramatic Market Correction Leads National Decline

The Sunshine State, long a premier destination for vacation property buyers, has experienced the most dramatic market correction nationwide. Miami topped the list with a staggering 32.2% year-over-year decline in second-home mortgage originations in 2024—the steepest drop among major U.S. metropolitan areas. Four other Florida metros followed closely behind: Orlando (-28.4%), Fort Lauderdale (-28%), West Palm Beach (-23.7%), and Tampa (-20.9%).

This pronounced Florida retreat stems from multiple factors eroding the state's traditional appeal:

• Escalating Ownership Costs: Beyond purchase prices, ongoing costs including property insurance (particularly in coastal areas), homeowners association fees, and property taxes have risen dramatically.

• Climate Concerns: Increasing frequency and severity of hurricanes, flooding, and other natural disasters have heightened buyer anxiety about long-term property viability and maintenance costs.

• Value Preservation Worries: The combination of rising ownership costs and climate risks has sparked concerns about future property values, deterring investment-minded buyers.

Despite these challenges, West Palm Beach maintains the highest concentration of second-home mortgages among major metros, with these properties representing 5.6% of all mortgage originations in 2024. New Brunswick, NJ (4.2%) and Riverside (Palm Springs), CA (3.5%) rounded out the top three markets by concentration.

The vacation home decline isn't universal, however. Second-home mortgages increased in several unexpected markets, with Detroit experiencing a remarkable 26% year-over-year growth, followed by San Francisco (17%) and San Jose (15.9%). Nevertheless, these figures represent growth from a small base, as second homes still account for less than 2% of all mortgages in these areas.

Demographics of Today's Vacation Home Buyers: Affluent, Established, and Predominantly White

An examination of who continues to purchase vacation properties in 2024 reveals clear demographic patterns:

By Income Level:

• High-income buyers (median household income: $280,000) secured 86.4% of second-home mortgages

• Middle-income buyers (median: $96,000) accounted for just 7.5%

• Low-income buyers (median: $64,000) represented only 2.7%

All income brackets reduced their vacation property acquisitions compared to 2023.

By Age Group:

• Gen X led the way, with 55-64 year olds capturing 30.2% of vacation home mortgages and 45-54 year olds securing 28.4%

• Younger buyers (35-44 years) accounted for 20%

• Baby boomers (65-74 years) represented 12.5%

Notably, while Gen X dominated the market in absolute numbers, they purchased fewer vacation homes than in previous years. Baby boomers were the only generation to increase their vacation property acquisitions in 2024, with 65-74 year olds increasing purchases by 4.5% and those over 74 increasing by 8.6%.

By Race:

• White homebuyers secured 79.7% of all second-home mortgages

• Asian (6.4%), Hispanic (6%), and Black (2.6%) buyers collectively accounted for just 15% of the market

• All racial groups reduced vacation home purchases compared to 2023

Regional Variations Reveal Complex Market Dynamics

The vacation home market shows significant regional differences beyond Florida's pronounced decline. Among the nation's 50 most populous metropolitan areas:

• 30 metros experienced year-over-year declines in second-home mortgages

• 2 metros remained unchanged

• 18 metros saw increases

Beyond the statistical metrics, these patterns reflect shifting priorities and possibilities for American households. High-value coastal markets like Nassau County, NY ($1,705,000 median value) and San Jose, CA ($1,695,000) demonstrate that second homes remain primarily accessible to the very affluent, especially in desirable locations.

Insights: Understanding Today's Vacation Property Market

Why are vacation home purchases declining so dramatically in Florida?

Florida's perfect storm of rising insurance costs (especially for hurricane and flood coverage), increasing property taxes, elevated HOA fees, and growing climate concerns has significantly diminished its appeal for second-home buyers. Additionally, with rental market saturation, the investment potential that previously attracted many buyers has weakened considerably.

Are any regions bucking the downward trend?

Yes, several unexpected markets are seeing growth in vacation home purchases. Detroit led with 26% year-over-year growth, followed by San Francisco (17%) and San Jose (15.9%). However, these increases come from a small baseline, as second homes represent less than 2% of mortgages in these areas. Other growth markets include Minneapolis (15.8%), Charlotte (13.4%), and Seattle (10.9%).

Who can still afford vacation homes in today's market?

The data clearly shows that second homes have become increasingly exclusive. With 86.4% of vacation home mortgages going to high-income buyers (median household income: $280,000), these properties have moved further out of reach for middle-class Americans. The typical vacation home buyer in 2024 is a white, high-earning Gen Xer with substantial financial resources.

Will the vacation home market recover to pandemic-era levels?

Recovery to pandemic levels appears unlikely in the near term. The 2020-2021 boom represented extraordinary circumstances: record-low mortgage rates, widespread remote work adoption, and urban flight. With interest rates remaining elevated, return-to-office policies becoming more common, and economic uncertainty lingering, the fundamentals supporting the pandemic vacation home surge have largely disappeared.

How are short-term rental platforms affecting the market?

The cooling of platforms like Airbnb has significantly impacted investment-motivated purchases. Lower occupancy rates and increased competition have reduced expected returns, removing a key incentive that drove many vacation home purchases during the pandemic boom years. Many potential buyers who might have justified their purchase through rental income can no longer make the financial calculations work.