THE FEDERAL RESERVE HAS FUELED HOUSING COST INCREASES AND INFLATION WITH ITS POLICIES THAT REQUIRE REVIEW. 

Hottest Vacation Home Markets in the U.S. – 2022 Edition

Patrick Villanova, CEPF® FEB 10, 2022

The low interest environment during the COVID-19 pandemic has been a boon for the vacation real estate market. While millions of Americans took advantage of low interest rates and bought their first homes, others capitalized on the cheap money and purchased vacation homes.

Figures from the Home Mortgage Disclosure Act Database show that vacation homes comprised a larger percentage of home purchases in 2020 than in 2019, despite the COVID-19 pandemic. But with the Federal Reserve set to hike interest rates for the first time since the pandemic began, the vacation home market may evolve in the coming months.

To find the hottest markets for vacation homes, we compiled the number of mortgages issued for secondary homes in 2020 in nearly 400 metro areas across the country. We then divided this by the total number of mortgages issued to calculate the percentage of the market made up of second homes. For details on our data sources and how we put all the information together to create our final rankings, read the Data and Methodology section below.

Key Findings

• East Coast beach destinations dominate. It’s no surprise that coastal metro areas figure prominently in our rankings, but East Coast beach locales fare especially well. Seven of the top 10 metro areas for vacation homes are beach destinations along the East Coast, including No. 1: Ocean City, New Jersey.
• Secondary homes surged in 2020. The total number of second home purchases in 2020 ticked up relative to the previous year. While just 51,708 mortgages were taken out for secondary residences in 2019, that number more than tripled in 2020, reaching 160,158. In the 395 metro areas that we considered, 4.12% of approved mortgages were for second homes in 2020 compared to 3.24% of approved mortgages in 2019.

EXCERPTS:

1. Ocean City, NJ

In Ocean City, New Jersey, 72.80% of new mortgages were taken out for secondary homes, making this Jersey Shore beach town the hottest vacation home destination in the country, according to our metrics. Secondary mortgages comprised 2,931 of the 4,026 total new mortgages taken out in Ocean City.

2. Barnstable Town, MA

Barnstable Town, Massachusetts, has the second-highest percentage of mortgages for secondary homes across our study, 45.87%. Located on Cape Cod, 2,459 of the new mortgages taken out in this beach town in 2020 were for secondary homes, while 2,902 were for primary residences.

Data and Methodology

To find the hottest vacation home markets in the U.S., we examined data for 395 metro areas across these two metrics:

• Number of mortgages approved for secondary residences in 2020.
• Total number of mortgages approved in 2020.

We divided the number of mortgages approved for secondary residences by the total number of mortgages approved for each metro area. The metro area with the highest number of non-primary residence mortgages as a percentage of all approved mortgages ranked highest. The place with the lowest percentage ranked lowest.

Data for both metrics comes from the Consumer Financial Protection Bureau’s Home Mortgage Disclosure Act Database.

LINK