One segment of the real estate market seemingly unaffected by increasing interest rates and inventory shortages is the luxury second-home market, which saw unprecedented sales increases over the last two years.
Williamson County, Tenn., ranked second to Coeur d'Alene, Idaho, for the largest year-over-year sales increases of luxury second homes. Other destinations on the list included Charleston, S.C., Kitsap County, WA, and Orange County, Fl.
Research by Pacaso, a real estate company focused on the second-home market, showed sales of luxury second homes and investment properties (defined as homes sold for $1 million or more designated for seasonal and/or recreational use) increased in Williamson County by 42.1% year-over-year during the second quarter of 2022.
Nationwide the year-over-year second quarter increase was nearly 25%. That increase skyrocketed to 235% when compared to the first quarter of 2020.
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Pacaso Co-Founder and CEO Austin Allison said in a statement that overall, luxury real estate exceeded expectations and outperformed the rest of the second-home category and the overall real estate market in the second quarter of 2022.
“Despite a rising interest rate environment and growing concerns of a recession, it is clear that demand for this type of asset remains strong,” Allison added.
Affiliate Broker with RE/MAX Fine Homes, Ray Tadena, said not all second-home purchases are true second homes, but an additional home that might become the primary home to allow a family to relocate to a place like Middle Tennessee more easily.
"I believe there are some buyers who buy a second home in Middle Tennessee as a contingency to where they are currently residing," Tadena said. "If they move into that second home and make it their primary residence, it will likely be a more appealing setting than where they are living. If not, why not go to the beach? There’s an element to living in Middle Tennessee that is unique and unlike anywhere else in the world."
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A spokesperson for Pacaso attributed the increases partially to the pandemic which allowed people more flexibility to spend time away from their primary home and office due to the ongoing shift toward working from home. States like Tennessee, with no state income tax, are appealing places for luxury, second-home buyers.