The resort and second-home market in 2025 was a dynamic one, with seemingly daily shifts in both opportunities and challenges. Since vacation homes are a discretionary product, consumers in this space tend to make a purchase when they feel most comfortable or optimistic. Unfortunately, 2025 is a year marked by uncertainty due to various factors, including wars/terror, tariffs, interest rate fluctuations, and political unrest.
This, in turn, can negatively impact consumer confidence, an important driver of second-home demand. In fact, the end of the third quarter of this year revealed a Consumer Confidence Index score of 99, marking the first time the index has dropped below the desired benchmark score of 100 since the pandemic began.
More importantly, Moody’s predicts that this score will decline in the coming years and stay below 100 until 2029. Further, recent survey data from the University of Michigan revealed that upper-income households (those in the top third of earners) provided one of the highest levels on record for the percentage that believe now is a “Bad Time to Purchase a Home Because of Uncertain Future” – also not a good sign for vacation home purchases.
But the outlook is not all doom and gloom. Domestic visitors to Hawaii, for example, are at or near all-time highs. Visitors to our national parks, which are often near second-home markets, are also at peak levels. And while the media often focuses on the wide swings in the stock market from day to day, the reality is that the S&P 500 remains incredibly strong. Even interest rates, which can make the “want” stronger when lower/easier to afford, are showing signs that better days are ahead.
Hawaii is a good example. On one hand, brokers in many resort areas report a notable slowdown in activity in 2025, with few clear indicators of a rebound in the coming year. That said, there are several indicators of market strength. For instance, it was recently announced that two new ultra-luxury high-rise towers in the Ward Village master plan in Honolulu experienced $1.2 billion in presale activity, including a $40 million penthouse.
Or Kohanaiki, the private, highly amenitized golf and beach development on the Big Island, experienced record sales in 2024, continued solid sales activity in 2025, and is gearing up for new developer product releases in the near term.
Taking all of this into consideration, we expect that 2026 will continue to present challenges. In these uncertain times, those who thrive will be those with a perfectly executed product, irreplaceable locations, and a strong marketing plan that makes the decision easy.
