Cash buyers and demand for short-term rental properties are driving the resale housing market in the Mid-Atlantic, bucking national trends.
According to data from regional MLS website Bright MLS, sales in the region are outpacing pre-pandemic levels.That’s in stark contrast to the national market, where mortgage rates on vacation homes are locked in at their levels this year. Lowest level since 2016According to Mansion Global.
“We’re still seeing prices hold up, largely because inventory levels remain low,” said Lisa Sturtevant, chief economist at Bright. “The number of listings available for sale is really low.”
Despite the high prices, sales in the Del/Mar coastal region and the Maryland/West Virginia Panhandle region were up 140% and 261%, respectively, from pre-pandemic levels. This is partly driven by demand for investment properties that will be put on the short-term rental market.
Bright said more than half of vacation homebuyers paid in cash, compared with 14 percent of first-time buyers, making the market more resilient to high interest rates.
High demand may be removing the market’s typical seasonality.
“People don’t typically buy beach houses in the summer,” Sturtevant said, explaining that buyers often try to close months before golden beaches open so they can use the property or rent it out. “There could be more opportunistic buyers in the summer.”
Bright’s analysis involves some guesswork: Because there’s no way to distinguish between primary and secondary homebuyers, the analysis assumes that buyers in areas with a high proportion of vacation homes — areas known for ski resorts or beach houses — are vacation homebuyers .
The market is showing signs of weakness.
Rental demand for short-term rentals has fallen from its lockdown-era peak, which Stewart Vant believes will lead to an increase in listings.
Last month, 15 percent of second-home sellers were investors, she said.
The inventory of homes priced over $500,000 is near 2019 levels, according to Bright’s research. As more companies bring employees back to the office, homeowners who use their second homes as co-primary residences will be more likely to sell.
But as long as the economy and employment remain strong, Sturtevant isn’t predicting big price changes.
“I don’t think we’re expecting a big drop in prices because inventories are still low and demand is still high,” she said.
