When your vacation home is the first one you buy

Lillie Walsh Dudley and Andy Dudley wanted to be homeowners. The couple, who have a 5-year-old son, had been renting in the South Slope neighborhood in the New York City borough of Brooklyn since 2014. They began looking for something to buy about three years ago.

“Even though we’re not rolling in money, we had a little bit of savings,” said Lillie Walsh Dudley, 41, who works in book publishing, as does Andy Dudley, 45. Still, not enough to buy in Brooklyn. “Anything we could possibly afford would be a stretch and a downgrade from our rental.”

Then the pandemic hit, and their apartment suddenly felt small and the city itself felt claustrophobic. The couple decided to try another house hunt.

This time, instead of looking in Brooklyn, they looked farther out — much farther. Their plan: keep their rental and buy a second home about three hours away in the Catskills. In August 2020, they paid $221,000 for a move-in ready, 100-year-old house in Roxbury, New York.

A growing number of first-time buyers are doing what the Dudleys did — purchasing a second home while renting their main residence. Though there isn’t data to track this trend, real estate agents and industry observers say a combination of rapidly rising home prices and pandemic work-from-home flexibility has prompted some hopeful homeowners to skip the first step — owning a primary home — and go straight to buying a second home in a more affordable location.

Vacation home purchases in general boomed during the pandemic. In 2020, loan applications for vacation homes were up 30% from 2019, according to the most recently available data from the Home Mortgage Disclosure Act. Zillow, a real estate website, looked at homes for sale in vacation and weekend destinations, and in January 2019 one-quarter of those markets had more page views per home than typical markets. By January 2022, half of them did.

First-time homeownership nationwide has been falling dramatically. In 2009, first-timers made up 45% of the homebuying market, but by January 2022 they represented just 27%, according to the National Association of Realtors. And with median home prices up 13.7% from a year ago, the challenges are mounting.

Some first-timers are getting creative. Virginia Alber-Glanstaetten, 51, and Becky Goodman, 35, who are renters in the Dumbo neighborhood in Brooklyn, said COVID-era lifestyle changes, including remote work, prompted them to buy their first home together near Provincetown, Massachusetts, where they have vacationed for years. Their budget of $800,000 for a primary home wouldn’t have gotten them much more space than they already had in Brooklyn, they said. But on Cape Cod, where they bought, there were more options within their budget, which was about $600,000 after setting aside enough to keep paying rent in Brooklyn.

In March 2021, they paid $605,000 for a 220-year-old fixer-upper on 1.3 acres in North Truro, Massachusetts. “Everyone in my family thought I was insane and that it was the backward way of doing things,” said Goodman.

The home they bought had long ago been converted from a single family into three separate units, which was part of the appeal. The couple plans to stay in one of the units while renting out the others as investment income. With their jobs still partially remote, they have been spending weeks at a time in Cape Cod, while keeping their rental as a home base closer to friends and work.

“The Cape Cod house has become this really beautiful escape,” said Goodman. “And we like having our resident footprint here in the city and doing the things we love here.”

Dylan Beaumont, 33, who owns a house in the Catskills and rents in Manhattan, put it this way: “If I’m up here for a week or a week and a half, it’s like, ‘I want to go to the city and get Thai food and see some friends,’” he said. “Then you get sick of the city, and you come up here and go hiking.” He and his fiancee, Susanah Zeffiro, 32, purchased in Margaretville, New York, in August 2020, pivoting from their original, pre-pandemic plan to buy a place in the city.

They paid $565,000 for the Catskills home and have spent more time there than they initially thought they would, with the prolonged nature of the pandemic. Beaumont and Zeffiro’s jobs in advertising are still partially remote, but they often have to meet with clients in the city or travel for work. “I love the balance,” Beaumont said.

Although the cost of buying in a rural area can be significantly lower than in the city, the pandemic buying spree has meant competition has been fierce. Last year, first-time buyers Anna Lewkowska and Alex McKean bought a second home in Yucca Valley, California, near Joshua Tree National Park. They put in offers on three different houses before landing the winning bid on a two-bedroom, 1½ bathroom house with about 2,000 square feet and panoramic views. They paid $517,000 — more than $120,000 over the list price.

That’s still a fraction of what it would have cost them to own a home in Santa Monica, California, where the median price today is $1.9 million, according to Realtor.com. Lewkowska, 31, who owns a talent management business, and McKean, 32, who works in product management for a pipe manufacturing company, said they love where they live near the beach in Santa Monica, but they knew homeownership was not affordable there. “We know that real estate is a great investment,” said Lewkowska. “But here in Los Angeles, it’s extremely expensive.”

They’ve spent the past year going back and forth between the two places while renovating the Yucca Valley property, doing some of the work themselves. They’ve dubbed the house the Mandarin Escape and describe the design style as “modern retro” with gold fixtures and a sunset, ‘70s color theme. The plan is to rent it out on Airbnb, starting later this spring. Lewkowska said they think they can charge between $250 and $1,000 a night, depending on the season. “It was the basic economics of it, for us,” McKean said.