HomeBusinessUS Mortgage Cut Reinforces Short-Term Rental Warning

US Mortgage Cut Reinforces Short-Term Rental Warning

Grant Cardone’s Prophecy Comes True: US Mortgage Cut Reinforces Short-Term Rental Warning

US homebuyers took out 40% fewer mortgages in 2023 than a year earlier – a figure that appears to prove real estate mogul Grant Cardone’s warning to avoid short-term rental properties correct.

Cardone told his followers on

Second-home mortgages are down 65% from the peak of the pandemic housing boom in 2021, according to a Redfin analysis of Home Mortgage Disclosure Act data.

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By comparison, first home mortgages fell by half that rate, down 20% year-on-year in 2023 and 35% from 2021.

Mortgages for second homes have fallen more than for first homes for various reasons

  • Second homes tend to be more expensive: a typical vacation home was worth $475,000 in 2021, compared to $375,000 for primary homes. The federal government has also increased borrowing costs for second homes in 2022, making it more expensive to buy one.

  • Vacation rentals are not as essential as regular homes, so when prices rise, many potential buyers withdraw.

  • Renting out a second home is less attractive because the market has weakened after the pandemic peak and homes generate less income.

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“Rising prices depressed demand for vacation homes last year, both for cash buyers and those getting mortgages – but the latter pulled back even more as high rates exacerbated high prices,” said Phoenix Redfin Premier agent Heather Mahmood- Corley. “There has been a small uptick in interest in second homes this year, especially from cash buyers who plan to eventually live there full-time. People who need a mortgage are still on the sidelines waiting for interest rates to rise.” is declining – especially since rates are typically higher even for second homes than for primary homes.”

As many companies require their employees to return to the office, there is less time to spend in a vacation home.

Starwood Capital Group CEO Barry Sternlicht recently said that as the labor market softens, more employees are voluntarily returning to the office because “there’s nothing like being together.”

According to the Redfin report, demand for vacation homes has not recovered this year. Mortgage interest rates for second homes have been near eight-year lows since early 2024. They are down 7.3% from April a year ago. Rate locks for primary homes fell by 1.6%.

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This article Grant Cardone’s Prophecy Comes True: US Mortgage Cut Reinforces Warning About Short-Term Rentals originally appeared on Benzinga.com

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