- U.S. second-home mortgage originations fell to about 86,600 in 2024 (2.6% of mortgages), the lowest since 2018.
- Florida led the pullback, with major metros like Miami, Orlando, and Fort Lauderdale down roughly 21% to 32% year over year.
- Higher insurance, HOA fees, property taxes, mortgage rates, and rising climate and regulatory risk are eroding vacation-home investment returns.
- Short-term rentals remain active as hosts shift toward fast-growing direct bookings, but ADRs, occupancy, and margins are increasingly pressured.
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The market for vacation homes and short-term rentals is undergoing significant recalibration. The sharp decline in second-home mortgages reflects more than just elevated borrowing costs; it signals compounding obstacles—insurance hikes, tax burdens, natural disaster risk, tighter regulations, and inflation-stressed consumers—that are reshaping the investment calculus. In Florida—long viewed as the bellwether for the U.S. vacation-home boom—all major metros show dramatic drops in purchase activity.
Investors and property owners are pivoting strategies. On one side, hosts are increasingly relying on direct bookings to reduce reliance on commission-heavy OTAs like Airbnb and Vrbo. While Airbnb still dominates reservation volume, data show explosive growth in direct channels (e.g. Hospitable’s Florida customer bookings rising over 340% from 2023 to 2024).
The revenue and occupancy picture presents a mixed bag. In high-tourism coastal and island-adjacent submarkets, average daily rates (ADRs) and off-peak occupancy are pressured by rising supply and off-season softness. Southwest Florida is illustrative—properties in Marco Island market achieved ADRs near $430 with occupancy still modest; but median home prices are correcting (down ~5-20% in several markets), which squeezes returns.
From a larger investor perspective, the shift toward fewer second homes being homes for passive income, and more toward professionally managed STRs or shorter stays, underscores changing demand preferences. Guests are booking later, seeking flexibility, value, and often leaning away from seasonal ownership in favor of rental stays.
Strategic implications: Investors need to be more selective—prioritizing coastal niche inventory with regulatory clarity, properties with favorable risk profiles, and direct guest acquisition strategies. Lenders and insurers will increasingly assess climate and regulatory risk. Markets with strong domestic tourism but lower regulatory friction (e.g., non-coastal Florida, or other states) may offer better yield stability.
Open questions include: how much regulatory tightening (e.g. short-term rental rules, zoning) will further limit supply; whether insurance and disaster-risk costs will continue to rise; how consumer travel behaviors will evolve in a high cost-of-living environment; and whether demand for ownership will rebound if mortgage rates decline.
Supporting Notes
- The U.S. saw ~86,604 second-home mortgages in 2024, a year-over-year drop of 5% and the lowest volume since 2018 per Redfin HMDA data.
- Second-home mortgages comprised just 2.6% of all U.S. mortgages in 2024, down from 2.8% in 2023; peak was about 5% during 2020.
- Florida metros’ year-over-year drop in originations: Miami -32.2%, Orlando -28.4%, Fort Lauderdale -28%, West Palm Beach -23.7%, Tampa -20.9%.
- Median value of second homes: ~$495,000 vs. ~$385,000 for primary homes in 2024.
- In Southwest Florida, ADR in Marco Island was ~$430 and average host annual revenue around $44,035; occupancy rates for Cape Coral ~59%, Fort Myers Beach ~40% off-peak.
- Florida-based hosts using Hospitable recorded a 343.6% increase in direct bookings from 2023 to 2024 (422 to 1,872 bookings). Total bookings across OTAs + direct rose ~29.5% to 325,583.
- Median rents in Florida dropped to $2,090 statewide in May 2025; vacancy rates rose to 6.9% from 5.8% a year prior; Miami rents down ~6.2%.
- Rising costs: insurance (especially for waterfronts), HOA fees, property taxes cited as major barriers by buyers and investors.