There’s often more risk involved when purchasing a second home than with a first home. Potential buyers may depend on rental cashflows, be wary of potential natural disasters, and be concerned about maintaining the property from a distance. And in a particularly volatile environment for mortgage rates, making the wrong choice can become quite costly.
To get a better idea of the demand for rental and vacation markets, SmartAsset analyzed data for more than 400 metro areas to uncover the most popular places for second homes. For details on our data sources and rankings, read the Data and Methodology section below.
This is SmartAsset’s sixth study on where people are buying second homes in the U.S. Check out the previous version here.
Key Findings
- The Southeast dominates the top 10. In particular, Florida and South Carolina take the cake, with Naples, Myrtle Beach, The Villages, Hilton Head and Fort Myers placing.
- Only two Northeastern metro areas make the top 10, but they claim the top spots once again. The Ocean City, New Jersey and Barnstable Town, Massachusetts metro areas rank No. 1 and No. 2 and have done so for four editions of this study in tandem. Secondary mortgages account for more than 61% of all approved mortgages in both areas.
- This metro area is one of the few non-coastal areas that ranked near the top of the list. The Flagstaff, Arizona metro area ranks No. 5 and secondary homes make up more than half of all mortgages (51.05%). For context, the median home value in the area is just under $394,000.
1. Ocean City, NJ
For the fifth year in a row, Ocean City, New Jersey takes the No. 1 spot. More than 81% of mortgages approved in the metro area were for secondary homes. In gross figures, that is 4,910 mortgages for secondary homes vs. 1,129 for primary residences. The median home value in this coastal area is just over $365,000.
2. Barnstable Town, MA
Similar to the No. 1 ranking place, Barnstable, Massachusetts holds its rank for another year. Here, almost 62% of approved mortgages are for secondary homes and it's worth noting that a home will typically set a buyer back about $500,000 in the area. Barnstable Town, MA is also the last of the Northeast that made it into the top 10.
3. Naples-Marco Island, FL
This coastal area of just under 386,000 people edges out the No. 4 ranking city by 0.01% when it comes to approved mortgages for second homes. Specifically, the Naples, Florida metro area had 8,206 mortgages out of 15,223 approved for second homes - making up 53.91% of all mortgages, to be exact.
4. Salisbury, MD-DE
There are just under 54% of approved mortgages for second homes in Salisbury, which stretches across Maryland and Delaware (9,132 mortgages in gross terms). The area is home to roughly 429,200 people and the median home value falls just under $300,000.
5. Flagstaff, AZ
Flagstaff, Arizona is one of the few areas in the top 10 that doesn’t have shores within a few miles. Here, just over half of homes are for secondary residences (1,480 mortgages, to be exact). The median home value is pushing $394,000 in an area of 145,000 people.
6. Kahului-Wailuku-Lahaina, HI
Hawaii has long been considered both a paradise and an escape. And in the Kahului metro area specifically, which is located in the lush green island of Maui, 48.44% of homes are secondary residences. This heavy tourist destination is home to about 164,300 people and the median home value is roughly $744,400.
7. Myrtle Beach-Conway-North Myrtle Beach, SC-NC
The Myrtle Beach metro area, which spans across the Carolinas, moves down a rank from the previous edition of this study despite an increase of almost 16% in the number of second homes. This area has almost 510,000 people and 46.50% of approved mortgages were taken out for secondary homes. Buyers can expect to pay close to $242,800 for a home here.
8. The Villages, FL
Known as a retirement hotspot, it may be no surprise that The Villages, Florida metro area made it into the top 10. The area has seen a boom in population over the past few years and has been named one of the fastest-growing metro areas in the country. Similarly, the number of approved mortgages for second homes has also grown from 25.58% in the previous edition of this study to 44.56% currently.
9. Lake Havasu City-Kingman, AZ
The Lake Havasu, Arizona metro area is located just east of the Colorado River. The area is home to nearly 217,700 people and roughly 42.10% of all approved mortgages are for secondary homes. In terms of affordability, the median home value in the Lake Havasu area is $250,300.
10. Hilton Head Island-Bluffton, SC
The Hilton Head Island, South Carolina metro area is no stranger to the top 10 but has dropped three spots since our previous edition of this study. In this metro area, 41.29% of approved mortgages are for secondary homes (which is 3,734 mortgages, in gross terms). Here, one will find housing that typically hovers around the $366,000 mark.
Data and Methodology
To find out where people are buying second homes in the U.S., we examined data for 404 metro areas across these two metrics:
- Number of mortgages approved for secondary residences in 2021
- Total number of mortgages approved in 2021
We divided the number of mortgages approved for secondary residences by the total number of mortgages approved for each metro area. The metro area with the highest number of non-primary residence mortgages as a percentage of all approved mortgages ranked highest. The place with the lowest percentage ranked lowest.
Data for both metrics come from the Consumer Financial Protection Bureau’s Home Mortgage Disclosure Act Database and is specific to owner-occupied housing that doesn't serve as a principal dwelling, which includes second homes, vacation homes and rental properties.
Tips for Homebuying
- Know what to expect. Before you can make the offer, be sure to understand what costs you’ll incur. Our mortgage calculator can help you understand what your monthly mortgage will be, including insurance costs and taxes.
- Do your research. Find the best deals when shopping for a mortgage lender. SmartAsset has conducted comprehensive reviews on several options to help you get started.
- Work with a finance professional. A financial advisor can help you make the most of your money. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Questions about our study? Contact us at press@smartasset.com
Photo credit: ©iStock.com/NickyLloyd