Second-home demand in West Palm Beach fell significantly over the past year, declining at a much faster pace than primary-home purchases as affordability pressures and cooling rental dynamics reshape buyer behavior.
In 2024, 825 second-home mortgage originations were recorded in the West Palm Beach metro area. That represents a 23.7% year-over-year decline, a steep pullback compared to the modest 1.4% annual decline seen nationally in primary-home mortgages.
Even with the drop, second homes remain a meaningful segment of the local housing market. In West Palm Beach, 5.6% of all mortgage originations were for second homes — far above many Midwestern markets, reflecting South Florida’s status as a vacation and seasonal housing destination.
The median value of second homes in West Palm Beach reached $675,000, underscoring the premium nature of this segment.
Several structural forces are driving the sharp slowdown.
Higher Prices Amplify Sensitivity to Rates
Second homes in West Palm Beach command substantially higher prices than many primary residences nationwide.
- West Palm Beach median second-home value: $675,000
- National median second-home value: $495,000
At these price points, even small increases in mortgage rates translate into significant changes in monthly carrying costs. Additionally, loan fees for second homes increased in 2022 due to higher risk pricing adjustments, making financing more expensive compared to primary residences.
In a high-rate environment, discretionary purchases at luxury-level price points are especially vulnerable to pullbacks.
Vacation Properties Are Discretionary Assets
Unlike primary housing, second homes are not essential purchases. As inflation elevated costs across insurance, property taxes, travel, and everyday goods throughout 2024, many households reassessed large non-essential expenditures.
South Florida, in particular, has experienced rising insurance premiums and property-related expenses, increasing total ownership costs beyond just mortgage payments.
When economic uncertainty rises or financial conditions tighten, second homes tend to be the first category buyers pause.
A nearly 24% year-over-year drop in originations signals a normalization from the pandemic-era surge, when remote work and migration trends fueled exceptional demand across Palm Beach County.
Rental Market Cooling Impacts Investor Demand
During the height of pandemic migration, many buyers in West Palm Beach purchased second homes as hybrid vacation properties and income-producing short-term rentals.
That investment case has weakened:
- Rent growth has moderated.
- Short-term rental markets have cooled from peak demand.
- Increased supply has created more competition among property owners.
As revenue projections soften, leveraged buyers become more cautious — particularly in higher-priced coastal markets where acquisition costs are steep.
Return-to-Office Reduces Lifestyle Flexibility
Remote work flexibility once enabled seasonal residents to spend extended time in Florida properties while maintaining careers elsewhere.
With more employers requiring hybrid or in-office attendance, second-home usage has become less practical for some buyers. Reduced flexibility diminishes the appeal of owning a property primarily used for seasonal or occasional occupancy.
What the Data Suggests for West Palm Beach
While demand has fallen sharply, West Palm Beach remains one of the more active second-home markets nationally:
- 825 originations
- 5.6% of total mortgage activity
- Median value: $675,000
- YoY decline: -23.7%
The market is not disappearing — it is recalibrating. The dramatic slowdown reflects the sensitivity of higher-end, discretionary real estate to borrowing costs, inflation, and shifting lifestyle patterns.
Going forward, second-home activity in West Palm Beach will likely hinge on:
- Mortgage rate direction
- Insurance and ownership cost trends
- Rental market performance
- Broader wealth and equity market conditions
For now, the data makes one thing clear: in a tighter financial environment, even premier vacation markets like West Palm Beach are not immune to pullbacks in discretionary housing demand.