Second Homes: Recovery Post Financial Crisis

Historically, most mortgage origination volume comes from traditional purchase and refinance mortgages on primary residences. A smaller, yet significant portion of the market consists of purchase originations for second homes – homes that are neither the borrower’s primary residence nor an investment property. During the housing downturn, the second home mortgage market experienced a severe decline. However, in each year since 2009, the share of the mortgage market consisting of second home purchases has grown.

In the most recent edition of Housing Insights, Fannie Mae’s Economic & Strategic Research Group provides insights into the typical second home buyer, the history of the second home market, and the outlook for second home sales in the future.

Research shows that compared to primary residence home buyers, the typical second home buyer is older and more affluent, more likely to own financial assets, more likely to buy the home in cash, and tends to put more money down when using a mortgage.

By combining financial wealth data with home price and population data, findings suggest that the outlook for second home sales is positive in the near term, as those who have enjoyed appreciation in financial wealth now find themselves able to buy homes in popular second home destinations at a comparatively low cost. Further, as the population continues to age in the coming years more people will find themselves in this position, assuming investment patterns remain similar.

To learn more about our findings and the second home mortgage market, read our latest Housing Insights.

David Kopita
Business Analyst, Economic & Strategic Research

April 7, 2014

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) group included in this commentary should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.