‘Demand remains strong’: 3 luxury second home real estate trends agents need to know

In light of the recent 1. It offers affordability and flexibility 2. It might be a better fit for your lifestyle 3. It is a viable investment 4. Co-ownership reduces financial strain 6. It aligns with market data In today’s market, where the affordability of second homes has declined, and the financial commitment feels increasingly daunting, Pacaso offers a practical, luxurious, and flexible alternative. By enabling co-ownership of high-end properties, Pacaso addresses the needs of affluent buyers looking for a second home, making it an ideal investment for those seeking to enjoy a fantastic lifestyle without the full-time responsibility of traditional home ownership.

Curious about partnering with Pacaso? Michael, an owner of a Palm Springs Pacaso, and Rudy Siegel, a real estate agent with BHHS, share their candid thoughts about working with us and they compare our fully managed co-ownership model with a traditional whole home purchase. "It's been awesome — we get to start our vacation and our time together with our family and friends right away … we get a hundred percent utilization of our time, not the pain-in-the-neck factor of owning a whole second home,” said Michael. “It's so easy [too] from an agent's perspective,” Ruby added. “It was that turnkey. We just turned it over to Pacaso and they took care of everything from the beginning to the end. And the joy that Mike and his family had when I would speak with them … you’re only as happy as your clients.” Watch the video below to hear more. Interested in working with Pacaso? Check out our agent resources

Are your clients unsure if a second home will fit in their lifestyle? Point them to Pacaso’s co-ownership model. We bring together up to eight buyers to co-own and enjoy a fully furnished luxury second home, and we take care of all the hassles of traditional ownership. For many buyers, co-ownership can be the And this is where agents like you come in. Watch this video to learn how you can seamlessly refer clients to Pacaso and earn a full 3% referral commission.

As challenging economic conditions continue to impact affordability for second home buyers, agents need to explore new ways to supercharge their clients’ buying power and grow their business. Inman News’ Senior Director of Strategy Lauren Walker interviews Pacaso CEO Austin Allison about Pacaso’s co-ownership model, an opportunity for agents to help their clients own a second home while earning a 3% referral commission.  Since October 2020, Pacaso has paid over $21 million in referral commission to agents. However, the best part about working with Pacaso is a seamless referral experience. “Busy agents and brokerages have a lot on their plate. Our goal at Pacaso is to make working with us as easy as generating a referral,” Austin shared. Watch the interview to hear more about Pacaso’s commission structure, the referral process, current home buying preferences that agents need to capitalize on, and Pacaso’s new initiatives for agents.

Pacaso Second Home Market Analysis Q3 2022: Key takeaways Q3 2022 marked the end of the pandemic real estate boom for “The pandemic unleashed unprecedented, unsustainable demand for luxury second homes,” said Austin Allison, Co-Founder and CEO of Pacaso. “While market conditions deterred many buyers from making purchases in Q3, mortgage rate locks are still flowing at double the pace from before the pandemic. Remote work has become so prevalent that it has created a new normal for luxury second homes, and we should continue to see elevated demand in historical terms even as market conditions take the froth off.” All-cash buyers play a particularly important role in the luxury second home market and, unlike the buyers driving the mortgage rate lock figures, their buying power is not directly affected by the steep rate hikes of recent months. That said, all-cash buyers are generally more exposed to the ups and downs of the stock market, which has lost considerable ground since the beginning of the year. Luxury second home rate locks were 152% higher in Q3 2022 than they were in Q3 2019, the last reading for the same season before the pandemic. In fact, every quarter from Q3 2020 to Q3 2022 saw rate locks on luxury second homes clock in at more than double the level in the corresponding quarter of 2019. In 2018, And now that about half of the workforce has shed a key obstacle to getting away—probably permanently--second homes remain superbly poised to benefit from that newfound geographic freedom. “Market conditions are temporary, but remote work and the desire to spend time with your people in amazing places are here to stay. That’s why I remain bullish on second homes in the long-run, especially in the luxury tier and despite the short-term challenges,” continued Allison. Mortgage rate hikes, a weak stock market and general economic concerns, particularly regarding the housing market, combined to deter many buyers from purchasing a luxury second home in Q3. The relationship between mortgage rate hikes and second home rate locks is stark. Another important factor is the stock market. According to the National Association of Realtors, about half of second home buyers pay all-cash, and their role in the market isn’t captured by rate lock data. Luxury second home buyers tend to be affluent and hold much of their wealth in equities. Analysts Despite all that, rate locks were historically high—double their pre-pandemic level—so what is the story here? It turns out that rate locks varied throughout the country. Reviewing regional data, we observe a steeper decline in rate locks in premium destination communities, and an increase in more affordable locales. This is consistent with a trend we identified in our Despite the decline in rate locks, luxury second homes maintained their value in Q3. Prices have held up due to low inventory, as sellers who are also seeking to buy want to avoid trading a low mortgage rate for a high one, and as demand remains well above pre-pandemic levels.  Some parts of the housing market began to see price declines in Q3, particularly the middle and lower tiers in pandemic boomtowns. While that may extend to Pacaso identified the nation’s top second home markets by compiling census data on counties with a percentage of seasonal homes and median home values at or above the top 20th percentile, and by excluding those below the bottom 10th percentile of counties with the fewest households. Pacaso then analyzed real estate activity in the top second home markets by observing mortgage rate lock data, a leading indicator of second home buying activity. When applying for a mortgage rate lock, a home buyer must specify whether they are securing a mortgage rate for a primary home, secondary home or an investment property. Approximately 80% of mortgage rate locks result in home purchases. Mortgage rate lock data was provided by real estate analytics firm Optimal Blue and includes a sizable share of the market that is taken to be representative of the whole. For this analysis Pacaso’s research team looked at mortgage rate lock volume for both second homes and investment properties for Q3 2022 with a purchase price of greater than $1 million to focus on the luxury end of the second home and investment property category. Rate lock transactions and median purchase price data were sourced at the county level for counties that had a minimum of 5 second home transactions and aggregated quarterly, with Q3 representing the months of July through September 2022.

Second home buyer trends: Key takeaways Sales of luxury second homes increased nearly 25% year-over-year during the second quarter of 2022 and approximately 235% compared to Q1 2020, prior to the pandemic intensifying in the U.S.* What’s motivating these second home buyers and more is captured in the This report uses data from a July 2022 survey conducted online among more than 1,000 current and aspiring second homeowners with household incomes equivalent to or above $150,000 in the United States, United Kingdom and Canada. The findings shared in this report are specific to the U.S. “The newfound flexibility many Americans are afforded has made demand for second homeownership stronger than ever as people look to put quality of life front-and-center in their lifestyle,” said Pacaso CEO and Co-Founder Austin Allison. “When you buy a second home, you’re unlocking a new chapter in life, becoming a part of the fabric of the community, and above all else, finding a special place to spend time with friends and family.” “Existing second homeowners have experienced firsthand the life enriching possibilities of second homeownership and thus we expect to have more realistic responses as they have a peak under the hood of how often they use their home as opposed to dreamers who haven’t yet seen their preferred usage,” said Allison. “Our data shows that only  29% of people plan to visit their second home, more than 7x per year. This stat further cements co-ownership as a more efficient and sustainable option, as buyers have the power to own only what they will use. Owning 100% of a home you barely use is wasteful and antiquated.” Location, Price, and Size Drive Second Home Buying Decision  For both existing second homeowners and aspiring second homeowners, location (67% vs. 70%), price (49% vs. 66%) and home size (44% vs. 48%) are the top three most important considerations in purchasing decisions for their families when buying a second home.    Location, location, location! As the desire to own a second home grows, the role of location in the buying decision does as well with 67% of current second homeowners and 70% of aspiring second homeowners choosing location as their number one consideration when thinking about purchasing a second home. However, existing second homeowners (45%) tend to value the appeal of the neighborhood more than non-owners (30%). An inability to afford the second home they want is holding non-second homeowners (66%). Of the people who desire to own a second home but don’t already, four in ten (42%) show concern about the associated costs and more than one-third (35%) are hesitant about the effort to maintain a second home.  Nearly half of all current (44%) and non-second homeowners (48%) consider the size of the property when buying their second home. Both value travel time and amenities as other important considerations. “Maintaining a home at a luxury level with contemporary design, high-end furnishings and decor, top-notch amenities and appliances, regular cleaning and maintenance, comes at high cost and a large time commitment as to care for the home properly,” said Allison. “These buyers are still in the process of considering their lifestyle and how they plan to use their home, how often, and who will take care of it when they’re not there. There are options outside of traditional second homeownership, like co-ownership, that mitigate some ownership issues and provide better value.” Second home dreamers and owners aren’t crazy about catching a plane to head to their second home, but love a road trip Nearly two-thirds of people (64%) commute or expect to commute to their second home in four hours or less and the majority (87%) want to drive. One exception is that current second homeowners are slightly more likely to have longer commutes than those intending to own a second home would expect, as 43% of existing second homeowners commute more than four hours to their second home, while only 31% of intenders expect to travel more than four hours. Without major differences between owners versus non-owners, people overwhelmingly expect to drive to their second home (approaching nine in ten) than those who expect to fly (three in ten) or commute by train (one in ten). How the pandemic changed the definition of second home destinations  The permanent shift toward work-from-home has forever changed the way people work and is giving second home buyers more flexibility to spend time away from their primary home and office. “Both existing second homeowners and aspiring owners prefer domestic second homes because they are more accessible, allowing them to visit more often. These owners and aspiring owners are attracted to a second home to share with their family and friends so they can live life to the fullest,” said Savanta Director Research, Insights and Consulting, Amit Sahni. For second home dreamers, their second home is on the water When asked about their desired location type for purchasing a second home, 61% of non-second homeowners want to be near the water. Non-second homeowners ranked a beach house (42%) at the top of their list, followed by lake (19%) and mountain (14%). More people want their second homes in domestic locales  91% of existing second homeowners own domestically and 15% own internationally, which is in alignment with the desires of non-second homeowners.  Second home owners visit their homes less frequently but stay for longer  Non-owners and existing owners feel nearly the same about the number of trips they make and expect to make to their second home each year with only 29% of people planning to visit their second home more than six times per year. More than half (59%) of existing and intending owners visit and expect to visit their homes more than four times per year, with nearly a third (29%) visiting more than six times per year.   Existing second homeowners (61%) are generally more likely to spend two or three plus weeks on vacation, while people who desire to own a second home are more likely to spend one week or less on vacation (58%). 65% of owners and buyers spend or expect to spend two or fewer weeks per stay. “People who intend to own a second home are daydreaming of a perfect place to run to for a quick escape or for occasional weekend getaways throughout the year,” said Allison. “Whereas people who are already second homeowners may be a bit more comfortable with working from their second home or going for two or more weeks at a time, but just less frequently.” Methodology  Pacaso commissioned market research firm Savanta is a fast-growing data, market research, and advisory company. Savanta informs and inspires clients through powerful data, empowering technology, and high-impact consulting, all designed to help clients make better decisions and achieve faster progress. *

Many second home buyers are wary of high costs and ongoing maintenance, and worry they won’t have enough time to use their home. Pacaso is the best solution, according to San Francisco-based luxury real estate broker Roh Habibi of Sotheby’s International Realty. “Every complaint that I’ve gotten from my clients that own second and third homes in all these destinations — Pacaso has solved it,” said Roh, describing how Pacaso makes it easy for buyers to enjoy their second home. Plus, Pacaso handles the legwork, including tours, inspections and escrow. “For me as an agent, the Pacaso transactions are the easiest I will do all year.” Watch the video to learn more about co-ownership and the benefits of working with Pacaso, from easy in-person or virtual touring with clients to a generous and fast commission structure for agents. 

Luxury real estate broker Roh Habibi of Sotheby’s International Realty tours Bennett, a stunning 8,300 square-foot Pacaso in California Wine Country.  “As you can tell, the place is modern and contemporary but has a very warm and homey feel, ” says Roh. “It’s totally outfitted with professional interior design.” In this video, Roh highlights the While Bennett is sold out, you and your clients can tour other