City Mouse, Country House

Traditionally, relatively young professionals have tended to buy apartments in New York City but only rent in the Hamptons. As a broker with 10 years’ experience, however, I’ve seen a new, reverse trend gaining traction—to purchase a home in this area while continuing to rent in New York City instead.

I asked three of my recent buyers, who requested that their full names not be used, what was advantageous about owning in Hamptons, what type of apartment they might have purchased in Manhattan for what they paid here for a house, and what kind of work needed to be done at their new homes. All three are in the East Hampton area with a price point around $1 million.

The first new homeowner is Max, 46, who works in finance. He stressed the value of his purchase. He was able to buy an architect-renovated contemporary for $900,000 in a short sale in the tony Landfall section of East Hampton.

The house, located at 21 North Hollow Lane, is modern and light, has a pool, is within walking distance of a bay beach and is buffeted by a reserve. Its proximity to the water and its “happy” feel made Max take the plunge, but he said it was also a good buy. “I felt I paid 40 percent less than what the previous owner bought the house for and put into it in improvements in the five previous years, so I knew I was coming in at a good price point.”

He ran the numbers and decided that buying in the city was not a better value than renting. For what he paid for his East Hampton house he could have purchased a one-bedroom apartment in New York in a decent neighborhood, he said.

In terms of forgoing ownership in Manhattan, Max feels that an apartment is more of a “utility” since he is often out at work or meeting friends in the evenings. He sees his apartment as more a place to sleep and store things.

Of owning a house in the Hamptons, he said: “It is a sanctuary for many of us, it’s a place to mentally check out, and I feel like it’s a mini-vacation every time I go out there.

“More importantly, it gives me a channel to connect, or reconnect, with friends and family. I constantly have guests and there is so much for us to do—inside and outside. To me, that’s worth its weight in gold.”

On the downside, he said, are the long drive out and the fact that there is always work to be done: “I am a city guy, so I was not prepared for all the little maintenance issues that pop up when you own a house,“ he acknowledged. Since buying he has done small projects such as adding windows and re-doing closets. His plan is to continue to rent in New York City and perhaps purchase another Hamptons property as a rental investment.

Benjamin, 40, a writer and law professor recently purchased an architect-designed traditional home, also in the Landfall section of East Hampton. He paid $1.25 million for a 3,000-square-foot home at 81 North Woods Lane that offered well-designed interior spaces and a private backyard with a pool surrounded by a reserve. Again, the property is in walking distance to a bay beach.

Initially, Benjamin was looking for a modern-style house, “but then liked the shingled exterior, with an inside that’s perfectly amenable to a modern style.”

Like Max, he cited value as the reason he chose to buy, rather than rent, on the East End. “Square foot prices in the city are between $1,500 and $2,000,” he said. “I paid under $500 a square foot in the Hamptons.” What he spent on his East Hampton house would have landed “a nice one-bedroom in a good neighborhood in Manhattan,” he said.

He added that his East Hampton home gives him a quiet place to work when he’s not teaching, as well as space for his library. He and his girlfriend also enjoy the off-season as much as the summer and so could rent the house for the summer and cover a large portion of the mortgage if they desired. The house is “perfect for hosting the larger family,” he said of his relatives. “My brothers with their families keep showing up from California and France [and] the next visit is already booked!”

The house just needed cosmetic work such as interior painting and the replacement of gutters. The roof will need to be redone at some point, and Benjamin said he would like to redo the pool, but that neither is a pressing issue. Overall, he said he was “very happy” with his purchase.

Recently married finance professionals in their early 30s, David and Megan chose to buy a home in this area because they plan to leave the city soon to start a family.

“We viewed the Hamptons as a place in which we could escape to for peace and quiet, as well as more space, while we are still living in the city,” David said. He added that it was a good investment, too, since they could always rent the house in summer.

David and Megan “just could not wrap our heads around the numbers in Manhattan,” David said. “The price per square foot was outrageous, and that doesn’t factor in the crazy post-closing costs.” For the price they paid for their house, $1.162 million, they would have been able to afford a nice one- or two-bedroom that needed work, they said.

David and Megan decided to pick a location close to town and the ocean beaches, settling in a matter of days on 5 Holly Place in East Hampton. “If we were going to travel out here, especially when factoring in traffic, it didn’t make sense to be 15 to 20 minutes from the ocean,” David said.

The couple saw potential in the house and that the only work that needed to done was cosmetic. Since closing on it last fall, they had the house painted in lighter colors, refinished the floors, bought new appliances and hired a designer to help furnish and decorate. These small changes transformed the house from dark and dated to beachy and fresh.

As it is for many new homeowners, the day-to day costs can be a shock. “Although the price of maintaining the home is a bit more than we expected, we really love everything about our new home and community,” David said.

I have seen a similar trend with more expensive purchases, as well as with young American professionals living abroad. As apartment prices continue to rise in Manhattan, I predict we will see more young buyers purchasing property out here instead of in the city, both to gain some equity and have an investment that they can enjoy with friends and family, for years to come.

Ann Rasmussen is a licensed associate broker at Brown Harris Stevens. She can be contacted at arasmussen@bhshamptons.com.