Second-home mortgage originations climbed 4.1% in 2025, snapping a four-year losing streak. High earners with median incomes near $300,000 are driving the rebound, while most Americans remain priced out.
Source: Original report
Second-home mortgage originations rose 4.1% in 2025 compared with the prior year, marking the first annual increase since the pandemic-era peak in 2021, according to new data from Redfin analyzing Home Mortgage Disclosure Act (HMDA) records. The gain outpaced the 1% year-over-year uptick recorded for primary-home mortgages during the same period.
Affluent Buyers Are Driving the Rebound
The recovery in vacation-home demand is concentrated among the wealthiest Americans. Roughly 85% of all second-home mortgages originated in 2025 went to high-income borrowers, who reported a median annual income of approximately $294,000—more than three times the national median household income of $88,000. The median value of a second home purchased in 2025 stood at $515,000, compared with $395,000 for primary residences.
Redfin's economics research head Chen Zhao described the dynamic as a tale of two markets: wealthy households retain the financial flexibility to make large discretionary purchases despite elevated costs, while a substantial share of would-be primary-home buyers remain sidelined by high prices and elevated mortgage rates.
A Low Base Made the Numbers Look Better
The 4.1% gain is also partly a statistical rebound. Vacation-home purchases had fallen to roughly half of pre-pandemic levels by 2024, so even a modest improvement in demand was sufficient to produce a positive annual comparison. Second-home mortgages accounted for just 2.7% of all loan originations in 2025, up fractionally from 2.6% in 2024 but well below the 5.1% share recorded at the 2021 peak.
Why the Market Has Not Fully Recovered
Several structural headwinds continue to suppress vacation-home demand. Record home prices and persistently elevated mortgage rates have made discretionary purchases harder to justify. The return-to-office trend has reduced the flexibility that made remote-friendly second homes so attractive during the pandemic. Meanwhile, both short-term and long-term rental yields have softened, weakening the investment case for vacation properties.
Who Is Buying: Income, Age and Race
Breaking down the borrower profile for 2025 second-home loans:
- Income: 85.2% of vacation-home mortgages went to high earners; fewer than 3% went to low-income borrowers.
- Race: White buyers received 81.5% of second-home loans; Hispanic and Asian buyers each accounted for roughly 5-6%; Black buyers took out 2.2%.
- Age: The 55-64 age group led with 31.1% of vacation-home mortgages, followed closely by 45-54 year olds at 27.6%. Buyers under 35 represented just 5.4%.
West Palm Beach Leads in Second-Home Concentration
Among the 50 largest U.S. metro areas, West Palm Beach, FL had the highest concentration of second-home loan originations, with nearly 6% of all mortgages in the area designated for vacation properties. The New Jersey Shore market (New Brunswick metro) ranked second at 4.6%, while Riverside, CA—anchored by Palm Springs—came in third at 3.8%. New Brunswick posted the largest year-over-year percentage gain in that group, up 13%.
At the other end of the spectrum, Oakland, CA and Montgomery County, PA had the lowest shares, at just 0.5% each. Las Vegas recorded the steepest annual decline in second-home loan volume, falling 20.9%, followed by Los Angeles (-19.8%) and Philadelphia (-17.6%).
National Breadth of the Recovery
Despite the uneven picture across metros, second-home mortgage originations increased in 35 of the 50 largest U.S. metropolitan areas in 2025. Montgomery County, PA led in percentage growth at 28.8%, while Indianapolis followed at 26.6%—though vacation-home loans remain a very small fraction of total originations in both markets.
