A growing number of first-time buyers are purchasing a second home while renting their main residence. Industry observers say a combination of rising home prices and work-from-home flexibility has prompted some hopeful homeowners to skip owning a primary home and go straight to buying a second home in a more affordable location.
Vacation home purchases in general boomed during the pandemic. In 2020, loan applications for vacation homes were up 30 percent from 2019, according to the most recently available data from the Home Mortgage Disclosure Act.
Mortgage interest rates recently exceeded 5% for the first time in more than a decade. However, there are few signs that the sharp rise in mortgage rates will lead to noticeable declines in Bay Area home prices anytime soon.
The average interest rate for a 30-year fixed-rate mortgage reached 5.11% last week, up from 3% at the start of the year. But, experts say, low inventory and a willingness from high-earning home buyers to engage in bidding wars are expected to keep the Bay Area’s home prices from declining.