Some New York City renters are skipping the typical first rung on the urban homeownership ladder: Instead of investing in an apartment, they are buying a country house. Disappointed by what their budget will buy in the city, they are still living the American dream of having a place of their own, if only on the weekends, in the Catskills, at the Jersey Shore or in Connecticut.
For less than $350,000 an amount that barely buys a studio in brownstone Brooklyn these days they are finding that they can afford homes with three bedrooms or more on several acres of land, sometimes on lakefront property, or with a pool. For those with as much as $2 million to spend, the options range from turn-of-the century mansions to sprawling estates.
No one tracks the number of second-home buyers who continue to rent in the city. But real estate agents in weekend destinations throughout the Hudson Valley and other second-home markets within an easy drive of New York City, including Bucks County, Pa., Litchfield County, Conn., and the Jersey Shore, report an uptick in sales from urbanites eager to get into the market while interest rates remain low.
“We’re seeing this now more than ever before because prices are historically high in the city,” said Kathy Braddock, a managing director of the New York City office of William Raveis, which also has offices in Connecticut, Massachusetts, Rhode Island, New Hampshire, New Jersey, Maine and Vermont. While there always have been New York City renters looking to buy weekend homes, she noted, demand has been so strong that the company is introducing a new division this month called Raveis Escapes, to cater to New Yorkers shopping for their second home first. “A lot of hard-working young people can’t amass a down payment that’s substantial enough” to purchase something in the city, she said, noting that many co-op boards require sizable liquid assets in addition to hefty down payments and closing costs. “But they still want the benefits of homeownership.”
Gary DiMauro’s real estate agency upstate caters to city dwellers in search of a bucolic escape, with offices in Tivoli, Hudson, Catskill and Rhinebeck. “The city has boom-and-bust periods in which people feel locked out,” he said. This time around, he said, the heated New York City market is sending not only first-time home buyers with tight budgets his way; it is also sending people who can afford multimillion-dollar apartments in the city but are simply discouraged by their options.
One client that he works with “could spend $3 or $4 million for an apartment in the city,” he said. But for what he and his family need, “they would have to spend $6 or $7 million.” Instead, they are renting in the city and looking for a second home upstate in the $2 million range.
“I asked him, ‘Do you have any reservations about buying a second home first instead of making what would traditionally be the typical purchase of your primary residence first and then look to a second home?’ ” Mr. DiMauro said. “He said, ‘If I feel that I find what I want up here, at a price that is fair market value, I’m fine with the math.’ ”
Last year, Chris and Aileen Bruner, who rent a three-bedroom on the Upper West Side but had previously owned homes when they lived in other cities, decided to buy a weekend house in the village of Tuxedo Park, N.Y., a gated community. Less than 40 miles from Midtown in a rural corner of Orange County, it has houses ranging from $550,000 five-bedrooms to multimillion-dollar mansions situated around three lakes, according to Robert Silvay, a salesman at Tuxedo Park Fine.
In Manhattan, said Mr. Bruner, who works in the financial industry, “We can afford the cash outlay to rent a nice apartment but not necessarily the capital and long-term commitment to buy a similar-sized apartment.” The couple bought a $1.75 million lakefront three-bedroom on nearly two and a half acres that came with an electric-powered boat. Now, on weekends and summer breaks, they kayak, swim and play tennis or golf with their 10-year-old son at the local country club. “Buying there has been a great value from a lifestyle perspective,” Mr. Bruner said.
Mr. Silvay of Tuxedo Park Fine Homes said he is seeing a lot more people like the Bruners coming up to shop for weekend homes. “Half of them are renters, which is more than we’ve seen before,” Mr. Silvay said. “Most people are in the market to find a place to take the kids away from their two-bedroom apartment in Manhattan.”
Part of the reason first-time home buyers are considering second homes is that rising rents have made it difficult for first-time buyers to save enough for the hefty down payments required to buy in New York City. The median sales price in the second quarter was $980,000 in Manhattan and $605,000 in Brooklyn, according to reports from Douglas Elliman. Moreover, too few listings are pushing up the price of starter apartments.
“You have many consumers that really have a drive to purchase their primary residence, but it seems so far away,” said Jonathan J. Miller, the author of Douglas Elliman’s market reports and the president of the appraisal firm Miller Samuel. Even though plenty of urban professionals are making good money, he said, “they’re relegated to their lot in housing life for the moment, because they can’t necessarily compete with more affluent consumers.”
Outside the city, these renters are finding not only that their budgets will go a lot farther, but also that less cash is required upfront, and there is less pressure to rush into a purchase. And though real estate prices in some second-home markets have risen, they are still a relative bargain compared to the city.
Source NY Times