Real estate’s newest trend: the 2nd home
Who knew that properties that were once called vacation homes, beach houses, lake houses, or retreat homes would become so prevalent in people’s lives today? (Maybe you did, as you vigorously nod your head…thinking about your fantasy second home or perhaps even your real second home?)
For many people, these used to be rentals: the places you’d reserve for a weekend getaway or fun family trip. But now, they’ve taken on a greater role, so much so that these properties are being referred to as ‘second homes’ in the real estate market. Why?
Because people need a break. It’s been a crazy year, which led to a realization in people’s minds that they need more than just a weekend to get away from the chaos of city life. We crave relaxation. Tranquility. An escape.
And since working from home became the norm for many knowledge workers since March 2020, people can now spend more time in their second home.
Buyers are reevaluating their lifestyle choices
In Knight Frank’s 2021 Global Buyer Survey, nearly two out of 10 respondents reported that they have moved since the pandemic’s onset. Moreover, over a third of survey respondents expressed their desire to buy a second home because of the pandemic.
“With the rise of remote working, second homes or ‘co-primaries’ are becoming a viable option for more buyers seeking a better work/life balance,” the report’s findings noted.
Thanks to the pandemic-induced boom, vacation homes in particular are experiencing a significant surge in sales. The National Association of Realtors (NAR) released its 2021 Vacation Home Counties Report and it confirms the trend: this year, sales of vacation homes actually outpaced the real estate market overall.
Realtor.com chief economist Danielle Hale provided more context. “I think the experience of the past year and a half has definitely made people appreciate the value of having a place to take refuge from either everyday life or a global pandemic.”
Hale also confirmed that most of the demand for second homes has been coming from buyers in urban areas, which again attests to the paradigm shift in buyer behavior. It’s now more common than ever to find people dividing their time between their urban apartments and countryside homes.
Do you have to be a millionaire to afford a second home?
Based on the above information, one may (understandably) assume that only millionaires can afford to buy a second home. Or is that the case?
This assumption might have been true a few years ago, but due to the pandemic-induced paradigm shift, many people desiring a better work-life balance can purchase a second home. A hybrid-work revolution and historically low mortgage rates mean that you don’t have to be ultra-wealthy to do that.
Modest purchases are key. Leonard Steinberg, chief evangelist of real estate brokerage Compass Inc., explained this further in an interview with Bloomberg. “We’ve recognized especially in the past 18 months is that it’s possible to have a small apartment in the city and a small home outside the city.”
The other side of the coin
There are two sides to everything, and the same goes with the trend of buying a second home. Hybrid living can be physically, mentally, and financially tiresome. Managing multiple mortgages and traveling to a second home presents its own daunting challenges and expenses.
Sharon Saline, a clinical psychologist, emphasizes this fact. In an interview with Bloomberg, she said that when people invest their savings and income into buying a second home, they feel pressured to go there as much as they can in order to ‘get their money’s worth.’
Hence, being a second-time homebuyer isn’t just about whether you can afford it, but also about whether you can handle the mental and physical challenges that come with paying off two mortgages and more presumably, more frequent travel. (If all of that sounds dandy to you, it might be time to start looking for your home-away-from-home.)