Thread by @bopinion

The vacation housing market seems to be cooling off.

The number of mortgage rate locks on second homes increased 48% in May compared with a year earlier. Since last June, the jump had been greater than 80% each month trib.al/uP5egsl

But prospective second-home buyers shouldn't interpret the data as indicative of some big shakeout and a sign to take action

It's likely to remain a seller's market for vacation homes for the foreseeable future trib.al/uP5egsl

While some employees will be returning to the office, many will continue to have some flexibility.

And with limited labor available in seasonal towns, it will take even more time to increase the supply of homes than in the rest of the market trib.al/uP5egsl

Owning a second home often comes with headaches and unforeseen expenses.

But buying in a market that continues to be so tilted to sellers could prove to be especially disastrous for vacation homeowners trib.al/uP5egsl

From rushing to buy without understanding local ordinances targeting renters to waiving a home inspection in a destination prone to hurricanes, pitfalls abound trib.al/uP5egsl

Even worse, many seasonal towns have had such a run-up in prices, it's likely buyers may overpay, then be disappointed if they're expecting those eye-popping gains to continue trib.al/uP5egsl

Think twice before buying in Lake Tahoe, where the typical home value is now more than $604,000.

As of May, it had the biggest jump in home values — 28.2% — out of the top 20 metro areas with the highest share of homes listed as vacation homes trib.al/uP5egsl

It's a similar story in less expensive areas as well.

Home prices have also skyrocketed 28% in the Poconos, where the typical home value is about $227,500. Show Low, Arizona rounds out the top three, with home prices up almost 25%, to $292,150 trib.al/uP5egsl

Those hoping for a better deal will have to head pretty far afield.

Real estate investor @StevenPMcCord says he's surprised at how inflated home values are even in relatively obscure vacation areas in the middle of the country and in the South trib.al/uP5egsl

Those with below-average price growth over the past year that offer average prices or lower include:

➡️Waterloo State Recreation Area in Michigan
➡️Cloudcroft, New Mexico
➡️The Kerr reservoir area near Clarksville, Virginia trib.al/uP5egsl

Even if you're able to find a reasonably valued vacation home in this environment, there's a laundry list of things to keep in mind.

If you are considering renting it out, make sure you know if there are any local limitations on doing so trib.al/uP5egsl

Given the demand, some towns have established new rules (or are in the process of doing so) around what can and can't be done when it comes to renting a home.

Even if prices continue to go up, the expense of owning a place may easily outpace those gains trib.al/uP5egsl

Second homes close to the water or in the mountains need more upkeep:

🏡Replacing the HVAC
🏡Securing windows
🏡Dealing with pest damage

If you aren’t going to be there all the time, you might need to pay someone to check on it trib.al/uP5egsl

And finally, be aware that Fannie Mae and Freddie Mac are now subject to a lower cap on how many second-home loans they can buy from mortgage lenders

In turn, that means lenders could be stuck with those loans and will charge extra for that risk trib.al/uP5egsl