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If you’re looking for a vacation rental this summer, you might have to look harder than you’re used to.

According to data from real estate brokerage Redfin, vacation homes are no longer a must-have item for American homeowners looking for a scenic escape or the chance to earn extra income from a real estate side hustle. In fact, the number of vacation rental owners has dropped precipitously to the lowest level since records began in 2018.

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High Interest Rates and High Home Prices Scare Off Buyers

Redfin’s Home Mortgage Disclosure Act analysis shows that 86,604 homebuyers took out mortgages in 2024, a 5% drop from the previous year. Amongst the primary reasons for the fall were:

High interest rates High home prices Return to office mandates A drop in the rental market

“Most people aren’t buying vacation homes at all because mortgage rates and insurance costs – especially for waterfront homes and condos–have skyrocketed. Plus, people know they’re unlikely to earn much revenue from listing on Airbnb now that occupancy rates are down,” Lindsay Garcia, a Redfin Premier agent in Fort Lauderdale, Florida, said on the company's website. “While some wealthy cash buyers are still purchasing second homes, they are much more likely to make a low-ball offer or request concessions than they used to be.”

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Florida Takes The Biggest Hit

Data shows the demand for vacation rentals is falling fastest in Florida, where soaring insurance costs, homeowners association fees, and taxes amid extreme weather have fueled a mass sell-off. However, it’s not just the Sunshine State where people are opting against buying vacation rentals. Mortgage numbers for second homes have fallen in 30 of the 50 most populous U.S. metros, according to Redfin. Unsurprisingly, most vacation homes across the country were purchased by baby boomers who had both the cash and the time to enjoy their properties.

The Spring Buying Season Has Not Changed A Thing

Real estate agents and mortgage brokers who may have been looking forward to an increase in vacation rental sales this spring have been disappointed. According to The Wall Street Journal, fears about high interest rates have been exacerbated by tariff talk, causing the stock market to slide and buyers to hit pause on real estate purchases.

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“It really pulled back the market,” Rick Palacios Jr., director of research at John Burns Research & Consulting, told the Journal in reference to the tariffs. Developers who built aggressively in the Sunbelt to make up for the inventory shortfall have found themselves with unsold homes, the Journal says, and have been forced to offer concessions like interest rate buy-downs.

“If interest rates stay in the high 6% range like they are right now, that’s a soft home-price dynamic,” Andy Walden, Intercontinental Exchange’s (NYSE:ICE) head of mortgage and housing-market research, told the Journal.

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Airbnb Plans New Ventures

Airbnb (NASDAQ:ABNB) is taking measures to account for the cooling market. The Journal reports that the home-booking site is aggressively planning new ventures. This includes investing $250 million in recently announced new experiences and partnerships.

Talk of new investments immediately boosted the company’s stock price in February when they were first announced. Still, questions remained about the money being invested.

“I’m a little skeptical how much a $200 million investment can move that needle on a $100 billion market cap company,” Truist Securities analyst C. Patrick Scholes told the Journal.

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This article U.S. Vacation Rental Market Collapses As Second Home Purchases Drop To The Lowest Level Ever Amid High Interest Rates And Return To Office Mandates originally appeared on Benzinga.com