?The U.S. market for second homes has held up surprisingly well despite pressure from higher mortgage rates, according to a new analysis of the nation’s most popular spots with second-home buyers.

Nationally, 2.5% of all new mortgages in the 12 months through May were for second homes. That rate was unchanged from the prior 12-month period, according to a Realtor.com® analysis of data from mortgage analytics firm Optimal Blue.

The U.S. county with the highest share of second-home buyers is Cape May County, NJ, where nearly half of all mortgages over the past 12 months were for second homes. Perhaps unsurprisingly, all of the top 10 markets for second homes were either beachfront communities or mountain resort areas.

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If you get to choose where you live, why not go to the beach?  The freedom of working remotely has opened up the secondary market, so you can choose to have one home near your office and one near the place you desire.

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After the COVID-19 pandemic supercharged the market for second homes in 2021, prices in secondary markets have mostly held firm even as mortgage rates rose to two-decade highs over the past three years, denting demand. That’s due largely to a scarcity of homes for sale in prime second-home locations, mirroring trends in the broader market, says Northrop.

Of course, for many families, buying even one home seems financially out of reach. In 2023, the median household income for homebuyers jumped 22% to $107,000, from $88,000 the prior year, according to the National Association of Realtors®.

Data on second-home buyers is harder to come by, but a 2018 report from financial technology firm SmartAsset claimed the typical second-home buyer earns 160% more than the average buyer of a primary residence.

In terms of home prices, results were mixed across the 10 markets, indicating a sideways trend. Half of the top 10 markets saw annual gains in median listing prices, including a 4% gain in Cape May County home prices.

Notably, none of the current hottest second-home markets are in Florida, long considered a hub for East Coast snowbirds. That could reflect a preference for vacation homes that are within easy driving distance of the buyer’s primary residence, making Florida a more popular destination for permanent relocation than a second home.

To determine the most popular spots for second homes, Realtor.com used survey data from Optimal Blue to calculate the markets with the highest share of second-home mortgages out of all mortgage originations over the past 12 months. The data does not include transactions conducted in cash.

#1 In U.S.: Cape May County, NJ

Share of mortgages for second homes: 49.4%
Annual change in share: -1.2%
May 2024 median list price: $973,500
Annual change in list price: 4.0%

America’s top market for second homes is on the southern tip of New Jersey!  

In the most recent sales data from the NJ Association of Realtors (April), we see the Jersey Cape market continue to be active and profitable.  Homes sold, from January-April 2023 vs January-April 2024, increased an average of 24%!  (See graphic below):

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Meanwhile, in good news for home-buyers, Cape May County listings have increased an average of 14% year-to-date (January-April 2023 vs. January-April 2024), providing a much needed boost of inventory and helping to balance the market.

May's data will be released at the end of June.

Bottom Line

Whether you are thinking of buying or selling a home here in Cape May County, you need an agent who has seen it all.  Over the past 26 years I've helped hundreds of happy clients and look forward to helping you achieve your real estate goals at the Jersey Cape!  Reach out today to get started!

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