Published: May 23, 2025
Introduction: The Mystery of the “For Sale” Sign Glut
Drive through towns like Lake Tahoe, Sedona, or Lake Arrowhead, and you’ll notice something striking: real estate listings are piling up. Homes that would have sold within days in 2021 are now sitting idle for months. Buyers are hesitant, sellers are stubborn, and the local economies seem stuck. Why is this happening—especially at a time when much of the country is experiencing a housing shortage?
2020–2021: The Perfect Storm for Resort Real Estate Speculation
The story starts in early 2020. As the COVID-19 pandemic swept the globe, the Federal Reserve slashed interest rates to near-zero and launched a multi-trillion-dollar Quantitative Easing (QE) program. Mortgage rates plummeted below 3%, stimulus checks hit consumer bank accounts, and the newly remote workforce looked for an escape from urban density.
Enter the resort town. With stunning scenery, room to breathe, and (at the time) affordable prices, places like Park City, Aspen, Joshua Tree, and Asheville became hot commodities. Buyers included:
– Remote workers seeking lifestyle upgrades,
– Investors chasing Airbnb gold,
– Urbanites hedging against future lockdowns.
The frenzy was turbocharged by leverage. Easy lending terms and expectations of endless demand turned vacation homes into speculative assets, not just places to unwind. Prices soared—some by more than 40% in 18 months.
2022–2023: The Fed Slams the Brakes
By mid-2022, inflation was raging—the Consumer Price Index indicated inflation hit 9.1%. The Fed responded with its most aggressive rate hikes since the 1980s, raising the federal funds rate from near-zero to over 5% in a matter of months. Mortgage rates doubled, going from 3% to over 7%.
Simultaneously, the Fed began Quantitative Tightening (QT), pulling liquidity out of the national banking system. As money became more expensive to lend, real estate markets—especially speculative ones—began to freeze. Airbnb saturation became a real problem, as nightly rates fell and vacancies rose.
Suddenly, many investors were holding properties that:
– Couldn’t be refinanced,
– Were no longer profitable,
– Had limited resale demand due to high borrowing costs.
2023–2025: Inventory Rises — But Demand Doesn’t
This is where we are now. Resort town inventories are growing fast. Listings are staying up for 60, 90, even 120 days or more. Sellers still remember 2021 prices; buyers are facing 7%+ mortgages and a very different economy.
The result is ‘high inventory stagnation’: supply is plentiful, but demand is evaporating. Unlike primary markets—where owners need a place to live and low inventory supports prices—vacation markets are entirely discretionary. Owners don’t *need* these homes. Buyers are increasingly unwilling to take on inflated prices with higher financing costs.
What Makes Resort Markets Uniquely Vulnerable
Resort towns aren’t like the rest of the housing market. Here’s why they’re different:
1. Speculative Demand: Most buyers are investors or second-home seekers.
2. Non-Essential Use: These homes aren’t primary residences.
3. Overbuilt for Airbnb: Many towns over-zoned for short-term rentals during the boom, flooding the market with units.
4. Weak Local Economies: Few have enough full-time, year-round jobs to support home prices without outside demand.
5. Seasonality: Demand is highly cyclical—winter towns slump in summer, and vice versa.
These factors create conditions where price floors can fall out very quickly, especially if travel demand softens or financing becomes strained.
What Comes Next?
Expect a slow unwind. Prices may not crash, but they’ll decline steadily in real terms. Inventory will stay elevated unless interest rates fall dramatically or sellers cut aggressively. Towns that rely heavily on tourism and short-term rentals could see defaults rise and investor exits accelerate.
Some areas may introduce Airbnb restrictions to free up housing stock for local workers, further limiting income potential for second-home owners.
New buyers will likely demand much lower prices to justify the now-marginal returns. And unless the Fed reverses course entirely (which it’s unlikely to do in the short term), cheap money isn’t coming back anytime soon.
Conclusion: The Real Estate Boom’s Echo
What boomed the fastest during the pandemic is now echoing the loudest in its stagnation. Resort towns that once offered escape now feel frozen in time, with homes stuck in limbo.
This isn’t a housing crash in the traditional sense—it’s a confidence correction. And like all such corrections, it punishes the overleveraged and overoptimistic first. The rest will follow slowly, as the reality of higher rates, fewer buyers, and weakened cash flows settles in.
Real estate, like currency, depends on trust. And in the case of resort towns, that trust was built on the assumption that people would always want more vacation homes. That may still be true—but only at the right price.
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