Buying a Second Home First

By MICHELLE HIGGINSSEPT. 11, 2015

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.

Graeme Sibirsky and China Aroh Sibirsky are both artists and educators who live in a three-bedroom apartment they rent in Clinton Hill, Brooklyn. With a $600,000 budget, they initially searched for a house of a similar size to buy deeper in Brooklyn, looking as far as Mill Basin, Canarsie and East New York. But within their budget, they found that the places they could afford were smaller than their current apartment. “If we are spending hundreds of thousands of dollars, we need to feel we upgraded, not downgraded, our living space,” Mr. Sibirsky said.

Switching gears, they cut their budget in half and began searching for vacation houses upstate, in Sullivan County and Orange County, N.Y., and the Poconos in Pennsylvania. “We wanted to start investing in real estate, so we decided to start with a vacation home that was more affordable, can be rented on Airbnb and would be fun to enjoy ourselves, and with family and friends,” he said.

Searching on their own and with Carol Malek, principal broker at Malek Properties in White Lake, N.Y., the couple has homed in on three houses ranging from $225,000 to $325,000 — a three-bedroom with a pool; a smaller house on a lake; and a five-bedroom that needs renovation. While each has its trade-offs, Mr. Sibirsky said, “overall, you can get a nice vacation-weekend-summer place for a smaller amount of money.”

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 Homes.

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.”

Down at the Jersey Shore, Diane Turton Realtors, with offices up and down the coast, reports a 10 percent increase in New York City buyers this season. “These are folks who are renters in Manhattan and are buying at the Jersey Shore for weekend getaways,” said Perry Beneduce, the firm’s marketing director. “They find it easier to get to than the Hamptons, and more affordable. They want to be able to jump in their cars at a moment’s notice and get to the beach in an hour.”

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.

“It sounds crazy; you don’t own but you’re already planning a vacation house,” said Adam Friedman, 35, who sells medical devices and has rented in Manhattan for 12 years. “But let’s be honest. What I can afford in the city would be through a co-op, and the requirements are tough. They want more liquidity than I have right now.”

Mr. Friedman decided to begin searching for a weekend home after visiting some friends upstate who had made a similar move. Recently, he has been eyeing property along Connecticut’s southeastern coast. “Eight rooms. Four-bed, two-and-a-half-bath ranch-style, with a one-car garage, for a whopping $309,000,” he said, reading from a listing in Groton, Conn., he had jotted down recently. “Come on. Where’s my checkbook?” For that price in Manhattan, he said, you would be lucky to get two parking spots.

It helps, of course, if your rent is manageable. Though they’ve been together for more than a decade, Stefan Weisman and his partner, Sean Mills, both college professors who teach in Queens, have each held onto their separate rent-stabilized apartments in the city. “It’s totally a New York story,” said Mr. Mills, who has lived in the same Cobble Hill duplex for 22 years that he rents for approximately $2,070 a month. “It’s the kind of thing that you don’t give up without a really good reason,” he said, acknowledging, “you would think that a strong and solid and consistent relationship would be the best reason of all.” Mr. Weisman pays about $1,500 for his two-bedroom in Hell’s Kitchen.

They had all but given up on the idea of formally moving in together when Mr. Mills visited a friend near Woodstock, N.Y., and persuaded Mr. Weisman to start looking for a home to buy upstate. “When we found out interest rates were really low and the Catskills was a good deal, I kind of pushed forth and we went for it,” said Mr. Mills. In February, the couple bought a $188,000 two-bedroom, log-sided cabin on eight wooded acres in Big Indian, N.Y.

Inside the Tuxedo Park house. Credit Preston Schlebusch for The New York Times
There are fruit trees in the front yard and a creek in the back. Nearby are a lake for swimming and boating in the summer, and a ski area for the winter. When they are not there, the couple said, they rent the cabin out on Airbnb, which helps them cover the mortgage. “It was the solution to our stalemate about moving in together,” said Mr. Mills. “He loves Hell’s Kitchen. I love Brooklyn. We both love our house in the Catskills even more.”

First-time home buyers shopping for a weekend getaway need to consider repairs and general upkeep, including keeping the lawn cut during the summer and the driveway cleared when it snows in the winter. “When you rent, or have been in an apartment, for years, there’s that ‘Oh my gosh’ wake-up call,” said Anne Loftus, an executive recruiter based in Manhattan. “ ‘Where’s my super?’ ”

Ms. Loftus and her husband, Michael, an investment professional, both in their early 50s, sold their Upper East Side two-bedroom of 14 years in 2007, downsizing to a one-bedroom rental. Five years ago they bought a four-bedroom with a pool and privet hedges on an acre in Bridgehampton, N.Y., for less than $2 million. Though it wasn’t the first time they owned a home, maintaining a weekend house was an adjustment after years of apartment living. “The first couple of years, if the alarm went off, I’d drive out there,” said Ms. Loftus. But over the years, they’ve developed ties with neighbors who keep an eye on the house for them during the workweek, as well as a list of contractors they can call if something goes awry.

City folk should also be prepared for up-close encounters with country creatures. A few weeks ago, after a meteor shower lit up the sky with trails of light, Mr. Weisman heard a commotion outside the sun porch in the Catskills.

“I turned on the light and it was a big black bear pulling at the bird feeder,” he said. “It was scary. I had not seen a bear in my life. I was literally two or three feet away from it.”

After spotting evidence around the fruit trees in the front yard that the bear had been back, he decided to call the town hall and ask for advice. “The lady basically laughed at me. She said, ‘It’s the Catskills, everybody has bears in their front yard.’